ORAL ANSWERS TO QUESTIONS

DEFENCE

The Secretary of State was asked—

Overstretch

Simon Hughes: What recent assessment he has made of the risk of overstretch affecting forces' families.

John Hutton: Before I begin, I am sure that the whole House will wish to join me in sending our profound condolences to the families and friends of the servicemen killed in Afghanistan since the House last met. They were Sergeant Christopher Reed, of 6th Battalion the Rifles, and Corporal Robert Deering, Corporal Liam Elms and Lance Corporal Ben Whatley, all of them Royal Marines. Our thoughts and prayers are likewise with the family of the Royal Marine who died in Afghanistan yesterday.
	Providing effective help and support for service families remains a high priority for the Ministry of Defence. We recognise the challenges that service families face as a result of the current high level of operations and have already made a significant investment—for example, in service accommodation and in making it easier for service personnel and their families to keep in touch during operations. Specialist welfare support staff have also been increased by more than 20 per cent., and we will continue to look at further measures to help in the future.

Simon Hughes: I join the Secretary of State in paying tribute to those who have given their lives. As somebody with a Marines base in my constituency, I pay particular tribute to the Marines who suffered extensively over recent months in active service. Our thoughts are not just with their immediate families, but with their colleagues who remain to do the job on behalf of our country.
	Given that there is an opportunity later this year, when our troops come home at last from Iraq, and given that we know that the evidence shows the effects of overstretch on families, divorces and post-traumatic stress disorder, what proposals does the Secretary of State have for taking advantage of having one less theatre of operation to reduce the burdens generally and support the families who need us so much?

John Hutton: I welcome the hon. Gentleman's remarks about the Royal Marines at the beginning of his question; 3 Commando Brigade are doing an outstanding job in Afghanistan today and unfortunately, 42 and 45 Commando have taken very substantial casualties. I am grateful to him for his words of respect and admiration for the Royal Marines, who do a brilliant job for our country.
	On service families, the opportunity does present itself later this year, when the operation will significantly change in Iraq, for us to bring about a lessening of the operational tempo for the armed forces, and we are determined to take that opportunity. Of course, we have to keep under careful review the deployment in Afghanistan, and we are looking carefully at what we might need to do there in future weeks and months, but we must and should take advantage of what I think will be a very significant moment later this year to help servicemen and their families adjust to a better way of life, and a period when they can enjoy more contact with each other and their families. That is very much what we are trying to do, and I am grateful to the hon. Gentleman for allowing me to say that.

David Drew: I, too, associate myself with the earlier remarks about the support for our forces at this time. One of the best ways in which we can support families is to provide greater clarity regarding the provision of accommodation not only when people are serving, but when they leave the armed forces. Can we look again at the ways in which housing is made available, to make sure that it is more easily available and is provided in the way that many of us would like?

John Hutton: Yes; we are prepared at every time to look at ways in which we can improve how we do the work that my hon. Friend has referred to. He will like to know, I am sure, that the Government have made a commitment to invest significantly in improving the standard of service accommodation that we provide for single, as well as married, soldiers. I hope and believe that that will add significantly to some of the morale and satisfaction issues that he alluded to.

Michael Penning: May I also pay tribute to the Royal Marines, whom I, along with other Members of this House, had the privilege of visiting in Camp Bastion before the summer recess, and to the Rifles, which is a Territorial Army unit? What special help are families in the TA units being given when they lose their loved ones or when on deployment, which is a completely different issue for them than for the regulars?

John Hutton: Yes, I do accept that point. This is an issue for the welfare support staff whom the MOD employs, and it is also obviously the work of the TA battalions and their officers and commanding officers to make sure that TA soldiers, airmen and royal naval personnel who are on active service get the appropriate family and welfare support that they must receive. I can assure the hon. Gentleman that we put very significant effort into ensuring that the excellent service that the TA renders our armed forces is properly rewarded and that its families do not suffer as a consequence.

Ann Winterton: May I associate myself with the expressions of sympathy to the families and friends of those who have lost their lives since the House last met? When the Secretary of State considers the morale of families, will he take account of the fact that the quality and clarity of the information that they receive while family members are on active duty are vital, that the Ministry of Defence website is sadly lacking in this regard, as are other means of communication from the Ministry, and that because of modern communications, this information is often gained in other ways? I ask him to examine the matter, because I am sure he recognises that it is very important for the morale of families when their loved ones are fighting overseas.

John Hutton: I am very grateful to the hon. Lady for her question, and I agree with its central premise: it is incumbent on Ministers and on the services themselves to maintain morale among service families while husbands and other loved ones are on active service. We fully intend to discharge that duty. If there are practical ways in which we can enhance the utility of the MOD's website—I suspect that it is probably not the principal source of information in this context—we are happy to do that. I shall take away what she has said, consider it carefully and come back to her on it.

Iran

David Jones: What recent assessment he has made of potential military threats posed by Iran.

John Hutton: We routinely assess the military capabilities of other nations' armed forces, including those of Iran.

David Jones: Last month, Iran conducted a major naval exercise in the gulf of Oman, involving more than 60 warships and military aircraft. Next month, the first shipments of liquefied natural gas will start sailing from Qatar to Milford Haven, and in due course LNG from the Persian gulf will account for some 25 per cent. of the gas consumed in this country. To what extent does the Secretary of State recognise the military threat of Iran to the security of British energy supply and to what extent is the UK working with its allies and the Gulf Co-operation Council to counter it?

John Hutton: I welcome the hon. Gentleman's remarks. He will understand that we take a close interest in these matters. Iran has the ability to contribute not just to greater global security, but to greater global energy security. Unfortunately, it is not doing that, so its influence remains malign and it poses a significant threat not just to global security, but to regional security. Naturally, we keep all those matters under careful review and we discuss all these concerns closely with our allies in the Gulf and elsewhere, but it remains the policy of Her Majesty's Government to ensure that energy supply routes through the gulf of Aden remain open, and we have forces in place there to achieve just that.

Denis MacShane: I am unsure whether my right hon. Friend will have seen yesterday's report by Steve Erlanger in  The New York Times. It stated:
	"Hamas, with training from Iran and Hezbollah, has used the last two years to turn Gaza into a deadly maze of tunnels, booby traps and sophisticated roadside bombs."
	That came from  The New York Times, not any other source. Does the Secretary of State agree that Iran's involvement in the current crisis, including the smuggling of Fajr-3 missiles into the hands of Hamas, is a great danger and that the warm relationship between the leadership of Hamas and the current anti-Semitic leadership of Iran also indicates just what a poisonous role Iran is playing generally in the region and further afield?

John Hutton: I did not see that edition of  The New York Times, unlike my right hon. Friend. I shall just repeat my earlier comment that Iran's influence in the region is malign. We want the situation to be transformed, and we are actively pursuing better dialogue and engagement with Iran, but there can be no regional security as long as Iran continues to support not just terrorist organisations in the middle east, but, for example, Taliban elements in Afghanistan, and as long as Iran continues to have active and close links with some of the terrorists and insurgent groups in Iraq. That has to change. Iran has suffered as a result of the isolation that her foreign policy has brought upon her, and that can change if Iran changes her attitude and approach to these issues. Her Majesty's Government are clear about the need for peace and stability in the middle east, and that is not helped by the current policies of the Iranian Government.

Ben Wallace: Iran can pose such a local and strategic threat because of the technological assistance on missile defence and missile development that it continues to receive from both China and Russia. Can the Secretary of State tell us what Her Majesty's Government are doing to try to stop that flow from China and Russia?

John Hutton: I do not want to go into the detail of that point on the Floor of the House; I hope that the hon. Gentleman will understand. We share his concerns about the possibility of defence forces in Iran being enhanced by such technology and we are in discussions with several nations to try to prevent that from happening.

Hugo Swire: The news coming from Washington, from President-elect Obama, is that he seeks, and is willing, to engage with Iran. Is that a lead that the Government might want to follow?

John Hutton: We have diplomatic relations with Iran. As I said earlier, we seek an active engagement and dialogue with the Government of Iran, because they are potentially significant partners for peace and security in that region of the world, which is so sorely troubled by the absence of security, but that engagement has to be on the basis of respect for other nations' borders and frontiers and the right of other nations to live in peace and security. Currently, the Iranian Government do not respect those principles, and until they do, Iran will remain an international pariah state.

Julian Lewis: May I associate those on the Opposition Front Bench with the tribute paid to our service personnel who have died or been wounded since the House last met?
	In the answer to my hon. Friend the Member for Clwyd, West (Mr. Jones), the Secretary of State seemed to accept that Iran could, if it chose, pose a major naval threat to our fuel supplies. Does he accept that in countering such a threat our attack submarine fleet would be crucial? For that reason, will he consider restoring the promise that the Government made in 2004 to build eight Astute submarines?

John Hutton: We have looked very carefully at all these matters. As the hon. Gentleman knows, we are currently envisaging building seven Astute submarines, and that remains the Government's position. I do not dispute the important role of the ship submersible nuclear fleet in securing those trade routes, and I can assure him that, along with other naval assets from this country and our NATO partners, we retain credible naval forces designed to ensure that our energy supply routes, especially from the middle east, remain open.

Inquests

Rosie Cooper: What progress is being made in reducing the time taken to complete inquests on members of the armed forces killed on operations?

Bob Ainsworth: We have managed largely to eliminate the backlog of inquests. We have established the Defence Inquests Unit to lead our drive to improve co-ordination and support for families, coroners and others. However, some inquests, due to their complexity, will always take time, and it is only right that they are allowed to do so when necessary.

Rosie Cooper: I thank the Minister for that response, but perhaps he could tell us what lessons have been learned that will enable to us to continue to improve the service we give to the families of service personnel?

Bob Ainsworth: I have said to the House on previous occasions that one of my priorities in this job was to eliminate unnecessary delay, because it just adds to the pain and suffering of people who have lost their loved ones when we delay our inquiries, and often therefore the coroner's inquiries. We had to get on top of that, and we had to ensure that we eliminated such delay. We have done that over a period of time, and I am enormously pleased by that. We also need to look, as we are doing, at the level of service that we give to families when they have suffered a bereavement, to try to ensure that we give them the most professional support without breaking the vital link between the families and the individual regiments and units to which their loved ones belonged. That is also important.

Stewart Hosie: The Minister will be aware of the good progress made between the UK and Scottish Governments on ensuring that investigations can take place in Scotland into the deaths of service personnel who normally reside there, but I understand that some work remains to be done before that becomes a routine measure. What progress is being made and when is that likely to happen?

Bob Ainsworth: The hon. Gentleman may know that the then Secretary of State wrote to the Scottish Government in March last year on this issue. We eventually received a reply in November, and we will respond as soon as we are able to do so. I hope that that will be very shortly.

James Gray: I pay particular tribute to the retiring Wiltshire coroner, David Masters, who has done a superb job in getting the backlog down and in carrying out very difficult inquests such as that into XV179, the Hercules that was downed in Iraq. In the town of Wootton Bassett in my constituency, we see the return of the bodies week by week. Surely it is time for the Government to consider something rather like the hon. Member for Dundee, East (Stewart Hosie) is suggesting with regard to Scotland. Rather than using local coroners in Oxfordshire and now in Wiltshire to carry out these difficult inquests, would it not be possible to have the inquests in the places where the servicemen are based?

Bob Ainsworth: First, let me join the hon. Gentleman in praising the work of the Wiltshire coroner, whose dedication and thoroughness in his work are quite tremendous and should be applauded. We attempt to have inquests undertaken in the local area wherever possible and we have made some progress in that. We do so overwhelmingly for the benefit of the families. It is not possible in Scotland, but we are looking to sort that out and hope to have the assistance of the Scottish Government in doing so. Mr. Masters has undertaken a lot of inquests, and on the odd occasion he has taken inquests back when it was felt that the expertise that he was able to apply would be more useful than a local inquest. He has been very constructive in that regard.

Robert Key: Fallen service personnel are repatriated through Lyneham in the constituency of my hon. Friend the Member for North Wiltshire (Mr. Gray). The office and office staff, however, are in Salisbury. The retiring coroner said last week that he feared for the future of the coroner service in Wiltshire because a decision was made with no consultation to move the office and staff from Salisbury to Devizes, the excellent constituency of my right hon. and learned Friend the Member for Devizes (Mr. Ancram), who is in his place. The coroner fears that the expertise of those staff will be entirely lost. It is a complex and difficult situation involving relations with the military. Will the Minister undertake to look very closely at the future of the coroner service in Wiltshire to ensure that a service that serves the nation is not lost but, far from that, is enhanced?

Bob Ainsworth: I think that I ought to concentrate on trying to do my job as Minister for the Armed Forces rather than trying to run the coroner service as well. I would be worried if we lost the expertise. I am worried that we will lose the expertise that Mr. Masters has built up over time. He is due to retire, so that is possibly inevitable, but we need to try to keep that expertise. The hon. Gentleman laughs, but there is a possibility that we will not be able to retain Mr. Masters's services. I do not know whether that is the case, and it is not a matter for me. I would like us to do whatever we can to maintain the expertise that we have had, but it is not a matter for the MOD in the first instance.

Veterans (Homelessness)

Dari Taylor: What recent steps he has taken to provide support for veterans who become homeless.

Kevan Jones: We have introduced a number of measures that will make it easier for our service personnel to access social housing, become home owners and occupy void MOD properties as an interim measure before leaving service. Following the successful launch of Mike Jackson house, a 25-bed unit in Aldershot, we aim to gift land in Catterick for a similar project. It will offer more veterans short-term housing while they plan their return to independent living.

Dari Taylor: In thanking my hon. Friend for that response, I ask him to reassure the House that the statistics held on the number of veterans who are seeking good housing are accurate. We are aware that London's figures have improved enormously, but what about the rest of the country and, in particular, the north-east? It is time that the MOD spoke to every local authority and housing association to ensure that men and women who have served their country are treated with dignity when it is their turn to be housed or rehoused.

Kevan Jones: I thank my hon. Friend for her interest in this subject, which I know goes back many years. I also thank her for her work in County Durham in promoting the cadets force. This is a real issue. The MOD, along with the Department for Communities and Local Government, commissioned York university to carry out a study into London veterans, which showed that 6 per cent. of the London homeless population are veterans, down from 22 per cent. in 1997. I will be placing a copy of that report in the Library of the House. My hon. Friend also raises an important point about the extension of the problem in the rest of the country. I, along with the Department—I also had a meeting with service charities a couple of weeks ago—will try to commission similar research to ensure that we know not only what the state of the problem is but what can be done about it.

Nigel Waterson: A significant proportion of rough sleepers in my constituency appear to have a services background. Will the Minister give his support to a new project run by my local Salvation Army to set up a hostel for rough sleepers, and will he look into whether some MOD funding might be made available to help the project get off the ground?

Kevan Jones: I commend that initiative. On 2 December, I chaired a meeting of the Veterans Forum, which brings together service charities and others interested in the subject, to discuss homelessness. Later this week I will meet my hon. Friend the Member for Hartlepool (Mr. Wright), the Under-Secretary of State for Communities and Local Government, my counterpart in that Department, to talk about how local authorities and other charities can draw upon the existing expertise, as well as the money available for rough sleepers not only in London but across the country, so I would be interested in having details of the project to which the hon. Gentleman referred to see what assistance I can give.

Don Touhig: I welcome what my hon. Friend said about help for homeless ex-servicemen and women, but many who leave the armed forces have problems moving from service to civilian life. What is being done to promote the Veterans Agency as the first point of contact for servicemen and women who need help?

Kevan Jones: I pay tribute to the Service Personnel and Veterans Agency for its work in helping servicemen and veterans. My right hon. Friend highlights the transition stage. Clearly, one answer lies in projects such as Mike Jackson house and I want to explore with service charities and the Department for Communities and Local Government how we can expand the network of support throughout the country. Later this year, I intend to conduct a number of regional meetings with the Service Personnel and Veterans Agency to promote its work in the regions, and ensure that veterans, local authorities and other stakeholders know about the agency's excellent work.

Bob Russell: The Minister will be aware that in my constituency the Army is paying in excess of £700,000 a year for more than 200 Army family houses to stand empty. On homeless ex-soldiers, may I draw his attention to the excellent charity Veterans Aid? Can further support be given to the charity in assisting former members of Her Majesty's armed forces who have fallen on hard times and giving them somewhere decent to live?

Kevan Jones: I certainly commend the work of Veterans Aid. I visited the hon. Gentleman's constituency before Christmas, and one problem with some of the accommodation there is that it is waiting for refurbishment. There are other problems arising from the Addington Homes contract, on which I know that the hon. Gentleman is an expert. When MOD property becomes surplus the Department is conscious of and keen to look at opportunities for providing it on a short-term basis, or even longer term, to servicemen and women when they leave the armed forces. We shall certainly do what we can to help.

Pakistan/Afghanistan

David Taylor: What recent assessment he has made of the effect of the security situation in Pakistan on the routes used to supply UK armed forces serving in Afghanistan.

John Hutton: Our assessment of the security situation in Pakistan on the routes used to supply UK armed forces serving in Afghanistan is continuously reviewed. We are grateful to the Government of Pakistan for their support for resupply operations for UK and other ISAF—international security assistance force—members in Afghanistan. Through those efforts our lines of supply have not been significantly threatened and remain open and effective.

David Taylor: The recent closure of the crucial Khyber pass route into northern Afghanistan will no doubt have stretched our air bridge supply lines and the strategic transport aircraft fleet. Can the Secretary of State tell the House whether he is satisfied with the supply route options available and, more narrowly, whether there have been any problems at all with delivery to our servicemen and women in theatre of the all-important morale-boosting mail from home during the Christmas period and the weeks since?

John Hutton: I am grateful for my hon. Friend's concern. I can assure him that all the mail got through, and there is more than one supply route into Afghanistan. He referred to the recent closure of the Khyber pass; it was closed by the Pakistani security forces as part of a sweep to clear insurgents from that part of the Khyber agency, and it has been successful. I can assure my hon. Friend and the House that our lines of supply and communication to Afghanistan are robust and secure, and we have an effective air bridge. Clearly, the air bridge needs to be adequate and sufficient and, if necessary, we will not hesitate to provide additional resources to complement those that we have deployed.

James Arbuthnot: In view of the attacks on the supply route, is the Secretary of State considering acquiring new C-17 or C-130 aircraft, and if he is, will they be funded from the contingency reserve?

John Hutton: We are looking at all those issues. The right hon. Gentleman referred to the C-17s; we recently acquired additional C-17s, and we are looking at the possibility of acquiring more, yes.

Jim Devine: Along with other hon. Members, I visited Pakistan last week and met the President, the Prime Minister, senior Government figures and Opposition leaders. All were committed to democracy, and were encouraging about the support that the British Government have been giving, but they all expressed concern about Americans bombing and about drone missiles in the north of Pakistan. That not only undermines attempts to introduce democracy, but gives substance to the claims of terrorists. Will my right hon. Friend use his good offices to influence the Americans on that issue?

John Hutton: I have some sympathy with the points that my hon. Friend raises, but essentially those matters are between the US Government and the Government of Pakistan. It would be remiss of me if I did not point out to the House that the attacks have had a significant degrading effect on al-Qaeda operations in the area and, to that extent, have advanced the security of UK and ISAF forces in Afghanistan.

Bernard Jenkin: As the British Government reassess their strategy with regard to Afghanistan and Pakistan, alongside our American allies, will the Secretary of State comment on reports of an apparent fraying of relations between the British and American militaries? Will he take this opportunity to underline how important it is to our country that we should be able to offer the Americans effective military aid in support of their efforts, so that we remain as important to them as they are to us?

John Hutton: Again, I am very grateful—I am spending all my time today saying how grateful I am to hon. Members—to the hon. Gentleman, and I can give him an assurance. The reports are complete rubbish, and they do not reflect the current state of relations—military, political or diplomatic—between the UK and the United States. The United States remains our principal international ally. UK forces in Afghanistan and Iraq have done a superb job of advancing British policy, and the policies and security of our friends and allies around the world, and—I believe this to be true—they have no critics in the US military at all; it respects and appreciates the work of the UK's armed forces. That is a tribute to the professionalism and bravery of our soldiers, sailors and airmen. It remains my clear view that everything that we in the Ministry of Defence do will be designed to enhance that relationship and ensure that it remains strong and reliable in the years to come.

Lindsay Hoyle: My right hon. Friend rightly spelled out the need for more heavy-lift aircraft, but he mentioned using C-130s; where does that leave the A400M programme?

John Hutton: That is a very good question. The A400M programme is now likely to be subject to considerable delay— [Interruption]—because of problems that EADS is having in producing the aircraft, not because of any policy decision made by the UK Government or any other partner nations involved in the project. We cannot accept a three or four-year delay in the delivery of those aircraft. That would impose an unnecessary, unacceptable strain on our air assets. We, along with all our partner nations, will have to consider very carefully what the right response to the problem is.

Ian Taylor: One of the consequences of a better security situation in Iraq is that many of the fanatical extremists are moving up to the north-west frontier in Pakistan. Will the Secretary of State comment on the measures that he is trying to take to prevent the constant flow of extremists from the madrassahs in Pakistan to the front line, where they confront our troops? It is demoralising for our troops always to find that there can be replenishment by the Taliban, and reoccupation of sites that our armed forces had taken, once they have pulled back in order to retrench.

John Hutton: I agree absolutely with the central thrust of what the hon. Gentleman said—the need for greater border security between Afghanistan and Pakistan is a top priority, and I am glad, for example, that Presidents Karzai and Zardari recently agreed to focus additional effort on border security, which we welcome. The Pakistani frontier corps is making a significant effort, both in Baluchistan and in Waziristan in the tribal areas, to try to get a proper grip on what is happening. The hon. Gentleman is absolutely right that it is demoralising to see Pakistan used as a sanctuary and a source of resupply and reinforcement for the Taliban and al-Qaeda in Afghanistan. The solution to that problem will primarily require a greater focus of effort on the Afghan side of the border and on the Pakistan side, but I can assure him that British military advisers are involved in those debates and discussions, and we are looking at what further help we can provide, on both the Afghan and Pakistan sides of the border, to address those serious issues.

Liam Fox: Further to that, does the Secretary of State not agree that the federally administered tribal areas provide an enduring criminal sanctuary? They provide command and control for the Afghan insurgency, with financial support and training. Is not the bottom line that we cannot achieve our objectives in Afghanistan until we disrupt at the very least the al-Qaeda-Taliban network that is attacking from Pakistan? When the United States takes out al-Qaeda leaders, should we not celebrate, rather than criticise?

John Hutton: I think that that is exactly what I did a few minutes ago. They are our mortal enemy, and we are involved in a fundamental struggle with them, in which we must prevail. I accept the need for greater security in Afghanistan, which will be met to a great extent if we can tighten the freedom of movement across the Afghanistan-Pakistan border. The challenge is the best way to do so. It is primarily an Afghan and Pakistan issue of security that must be addressed, but we are doing everything that we possibly can to enhance the safety and security of the British mission, and that of our allies and partners in Afghanistan, as we deal with al-Qaeda and Taliban insurgents. That will continue to be my absolute priority during my time as Secretary of State for Defence.

Liam Fox: To guarantee the security of supplies when they reach Afghanistan, we need a rural security presence, especially with a dispersed rural population. Does the Secretary of State believe that we have sufficient forces to clear and hold territory, then build on that, whether from the international security assistance force, Operation Enduring Freedom or the Afghan national security forces? If extra forces are required, how can we get our allies to shoulder their fair share of the international security burden? Surely, joint security implies joint commitment?

John Hutton: Yes, I agree very strongly with that, too, and we continually make the case in NATO that our allies should take more responsibility for operations in Afghanistan. I believe that the conflict in Afghanistan will be the defining conflict of the 21st century for NATO, and will confirm its relevance or otherwise, so it is absolutely essential that there is proper and effective burden sharing. As for troop levels in Afghanistan, the hon. Gentleman will be aware that my right hon. Friend the Prime Minister made an announcement recently about additional deployments to Afghanistan, partly to advance some of the operations to which the hon. Gentleman drew attention. We need more security, particularly around Lashkagar, and that is what Operation Sond Chara was designed to do over Christmas and early in the new year. It has been a resounding success. The theatre capability review has just been completed in Afghanistan, and we are considering its findings. If there is a case, and if there is an announcement to be made about additional deployments in Afghanistan, I can assure the hon. Gentleman and the House that this will be the first place to hear it.

Veterans

James McGovern: What steps his Department has taken to raise public awareness of veterans' rights.

Kevan Jones: The nation's commitment to service personnel, dependants and veterans was set out in the service personnel Command Paper published last July, which received widespread publicity. Benefits and assisted support are publicised through Government and ex-service organisation websites and publications, and through local and national press articles. We are also determined to use the armed forces day on 27 June this year to publicise the range of benefits and support available to our veterans.

James McGovern: May I add my message of sympathy to those families who have lost a member of their family serving in the armed forces since the last time the House met. May I also pay tribute to Mr. Victor Herd and Mr. Bruce Kelly of the Combined Ex-Services Association in Dundee, whose time, effort and commitment ensure that Veterans day in Dundee has been a success every year since it was inaugurated. I am sure all hon. Members would agree that respect and recognition are due to those who have served this country, whether that comes via health care priority, the veterans' badge or, indeed, Veterans day. Could the Minister outline in more detail the Government's plans for the newly titled armed forces day 2009?

Kevan Jones: I add my congratulations to those two individuals. They are part of an army of volunteers throughout the country who serve charities and do unpaid voluntary work, and we should thank them wholeheartedly. I will make an announcement later this month on the successful city that has been chosen for Veterans day. Alongside that, I will publish suggestions about how towns, cities and communities can get involved, and I would like individual Members of Parliament to do what they can to promote armed forces and Veterans day.

Willie Rennie: Will the Minister join me in praising the work of the Fife Veterans Association, which does the sort of work that he described—voluntary work, promoting and standing up for veterans throughout the kingdom? The association does a splendid job promoting the rights of those veterans, and it deserves the support of the House and beyond.

Kevan Jones: I am pleased to join the hon. Gentleman in congratulating Fife veterans. I visited Scotland before Christmas and met Veterans Scotland. I pay tribute to them and the range of organisations involved in Veterans Scotland that are doing a fantastic job in Scotland to promote veterans' affairs and offer practical assistance to veterans.

Brian Jenkins: My hon. Friend recognises that we have made tremendous strides recently with regard to veterans. One measure that particularly pleased me and, I am sure, my hon. Friend and everyone else is the free university education for veterans and free training and qualifications for veterans. Have we yet linked up universities and colleges through the MOD and Army sites to allow veterans to be aware of where they can go, what qualifications they can get and the fact that they can take that up free?

Kevan Jones: Like my hon. Friend, I am pleased that that was a key part of the service command paper. Later this year we will announce the first individuals who will be taking advantage of that. Armed forces day will be part of the promotion of the steps that we have taken and where we are up to in implementing the recommendations in the service command paper. As my hon. Friend knows, in July this year the evaluation paper will be placed before Parliament showing exactly what we have done and how far we have got in implementing those measures, which our servicemen and women rightly deserve.

Andrew Murrison: The right to priority treatment for occupational illness caused by service in the armed forces is implicit in the military covenant, yet the UK is shamed by its allies' superior effort in raising awareness among servicemen, veterans, health care professionals and the general public of the potentially crippling nature of combat stress and what can be done about it. What plans does the Minister have for active combat stress case finding, or are his Government content simply to allow the increasing number of veterans with severe service-attributable mental ill health to go undiscovered and untreated?

Kevan Jones: I am shocked and surprised that someone who is a clinician does not understand what we have done. An excellent report recently produced by the King's Centre for Military Health Research outlines 10 years of research ranging from the issues associated with Gulf war syndrome to a very good study, which I suggest the hon. Gentleman should read, on Operation Telic, which looked at 7,000 people—3,000 who did not attend operations and 3,000 who did. It brings out some very good figures, and shows, for example, that some of the alarmist statements about post-traumatic stress disorder are not being found. That is not being complacent; it is making sure that we have the evidence in place to ensure that the services that those individuals deserve are available. I do not accept that the Government or the United Kingdom are doing any less than any other country. They are, perhaps, doing more.

Shipping Safety (Horn of Africa)

Andrew Pelling: If he will hold discussions with the Government of the People's Republic of China on the safety of shipping in the waters off the horn of Africa.

Bob Ainsworth: We continue to discuss the issue of shipping safety off the horn of Africa within the international community. UK officials and officials from the People's Republic of China will be in attendance at the contact group, which is due to meet this week to discuss a coherent international response to this difficult problem. The People's Republic of China has sent three vessels to the gulf of Aden and international forces are liaising with them to ensure that their activities are co-ordinated. We welcome China's contribution.

Andrew Pelling: Following on from the Minister's welcome, does he feel that this is an opportunity to work more closely and co-operatively with the People's Republic of China on defence matters in the African continent and the middle east as a whole?

Bob Ainsworth: We try to have appropriate contacts with the Chinese military, on a military-to-military basis. The Chinese military's potential is considerable because of their size; if they can be made to be a contributor to international efforts, as they already are in so many areas, that is to be welcomed. It is a positive move, and we do everything that we can to encourage it.

Topical Questions

Philip Hollobone: If he will make a statement on his departmental responsibilities.

John Hutton: My departmental responsibilities are to make and execute defence policy, to provide the armed forces with the capabilities that they need to achieve success in the military tasks in which they are engaged at home and abroad, and to ensure that they are ready to respond to any tasks that might arise in the future.

Philip Hollobone: What impact will sterling's collapse have on the UK's contribution to the joint strike fighter?

John Hutton: To answer that, we would have to think of what the exchange rate will be in five or 10 years' time, and I am not sure that the hon. Gentleman or I would want to engage in that kind of speculation.

Andrew MacKay: Will the Secretary of State let the House know his plans to airlift kit and equipment from Iraq to our troops in Afghanistan, particularly as with our troops leaving Iraq it would be extremely helpful to replace Snatch Land Rovers in the country so that we do not have any further problems there?

John Hutton: We will have to address those issues at the time. I say to the right hon. Gentleman that I have already made it clear that I would look to redeploy the Merlin helicopters from Iraq to Afghanistan as soon as is feasible; I think that that will be towards the end of this year.
	The chief of joint operations General Sir Nick Houghton has recently given advice to Ministers about the continuing use of Snatch Land Rovers, which we regard as important. However, that has to be seen alongside our commitment to a very significant investment in new armoured vehicles: nearly 1,200 new, better-armoured vehicles—Jackals, Mastiffs and others—will form the front line of the force on active patrol outside the base perimeters. They will provide significantly enhanced capabilities. The eventual destination point of all the equipment currently in Iraq is a matter that Ministers will decide on the advice of the service chiefs themselves.

Diane Abbott: The Secretary of State will be aware of the furore in the press over the weekend about Prince Harry's description of a fellow officer as a "Paki". Does he agree that although most people would accept that Prince Harry has grown up since then and that he probably did not intend to be abusive, very many people who originate from the Indian subcontinent find that term deeply offensive? It would be a shame if the very real efforts that the armed forces have made to recruit from diverse communities were undermined by the coverage of that incident.

John Hutton: I agree with my hon. Friend. I hope that all in the House would accept that the use of that kind of language has no place at all. I also accept her other point. Prince Harry has made, I think, a very genuine apology and I believe that no individual offence was intended by his remarks. I understand that Prince Harry will be interviewed by his commanding officer in the next few days.
	I also agree with what my right hon. Friend the Prime Minister has said about this matter. We have received the apology, and it is time for us to move on. We should not lose sight of one very important fact in all this: Prince Harry has served his country on active service in Afghanistan, and I believe strongly that there is no better example of public service than that.

Nick Harvey: The House is aware of the pressures on the defence budget. We have seen warship numbers reduced, the carriers delayed, helicopter numbers reduced, and the future rapid effect system programme reordered and delayed. Given the economic climate and the priority that the Prime Minister, in particular, is giving to jobs, will the Secretary of State stress to his Government colleagues the warnings from the defence industries and the fact that if the Government would invest in the defence programme now, durable jobs could be saved for the long term, and that if they do not, some of them will be lost for ever?

John Hutton: The hon. Gentleman refers to the equipment examination. The outcome of that was designed to save, protect and preserve jobs in the defence manufacturing base, and it will do so. In the west country, his own part of the country, the decision that will be made on the future Lynx helicopter will safeguard hundreds of jobs in Yeovil and thousands of jobs across the supply chain, mainly in the south-west. As regards naval construction, we have the largest programme under way since the end of the first world war. Therefore, with great respect to the hon. Gentleman, we will not take any lectures from him or his party, who are not even committed to matching the current levels that this Government are spending on defence.

Crispin Blunt: Just before Christmas, the Department announced, by way of written rather than oral statement, substantial cuts and delays in the defence equipment programme. What does it say about the current order of Government priorities that while they are throwing scores of billions at the economy in a desperate effort to avert disaster, far from accelerating the defence equipment programme, they are cutting it?

John Hutton: We are not cutting defence spending. I invite the hon. Gentleman to take a closer look at the examination outcome.  [ Interruption. ] No, we are not cutting the levels of defence spending announced in the comprehensive spending review, so there are no cuts in the MOD's defence budget. That is a fact. I challenge the hon. Gentleman to go away and see whether I am right or wrong; he will find that I am right.

Linda Gilroy: I join colleagues who have acknowledged the sad loss of life from current deployments; we should also acknowledge the severe injuries that are often happening. In respect of armed forces day, does the Secretary of State recognise that one of the key purposes of the first such day will be to acknowledge recent and current deployments, and can he assure me that that will be fully taken into account in the selection of the national focal point?

Kevan Jones: As I told the House earlier, I will be making an announcement later of the successful venue for the national celebrations. Let me emphasise to my hon. Friend and other Members that what is needed is that all communities, large or small, take active part in armed forces and Veterans day. I urge her and other hon. Members to ensure that they play a key part in encouraging local communities, councils and others to do so.

Michael Jack: The Minister with responsibility for defence procurement has considerable understanding of the German political system, so may I ask him what steps he is going to take in the continuing discussions among the partner countries in the Eurofighter consortium to ensure that the discussions on the shape, size and timing of tranche 3 are concluded well ahead of the German elections?

Quentin Davies: The right hon. Gentleman has been assiduous in pressing me on that, and I understand and respect the reasons for his doing so. He knows a lot about the background. I am sorry to say that I cannot take him much further forward today. Those discussions with the Germans and our other partners are continuing, and until we have concluded them we cannot make any announcement about the draw-downs of tranche 3. Of course, as soon as I can make a statement to the House, I will do so.

John Baron: Having prolonged periods in combat zones without proper rest is described as the No. 1 negative retention factor for officers and soldiers in the latest Army survey. Given that many Army units are in breach of the harmony guidelines, which recommend that units have a period of two years between operational tours, what will the Government do to try to give our troops the proper support that they fully deserve?

Bob Ainsworth: The hon. Gentleman knows, as does the whole House, that we have been operating above our defence planning assumptions for some time. That has led to the breach of harmony guidelines in several areas, although there has been an overall improvement in recent times. However, harmony guidelines issues still affect some units considerably. As the Secretary of State said, as we draw down to a lower level of commitment in Iraq, we must take the opportunity to look at what is needed in Afghanistan, and put ourselves on a sustainable footing with regard to individual and unit harmony guidelines as well as to what is needed in the operational theatre.

Jim Sheridan: My right hon. Friend will be aware that recruitment and retention is crucial to the long-term future of our armed forces. Would he therefore inform the House what incentive is in place to ensure that those who choose the armed forces as a career are given every opportunity to reach the very top, provided that they are capable? Any class system that exists should be dismantled.

John Hutton: This week the Government will set out new proposals to enhance the issue of social mobility; the armed forces must, above all else, be a genuine meritocracy. If there are practical steps that we can take to extend opportunities for people from a wide variety of backgrounds to reach the top in all of the three services, we should take advantage of them, and I hope that we will do so in the weeks and months ahead.

Gerald Howarth: The Secretary of State was keen to try to defend the Government against accusations by my hon. Friends that they have cut the budget. But I put it to him that the future Lynx programme has been cut, the FRES programme has been virtually abandoned, and the MARS programme—military afloat reach and sustainability—has been delayed, and he told the House in a written statement before Christmas that the aircraft carriers will be delayed by one or two years. While the Prime Minister is busy telling the rest of the country that he is spraying money around here, there and everywhere to stimulate projects, why does he not invest in the defence industry of this country? It is a high-tech industry with the capability to deliver high-quality jobs, and more importantly it can deliver for the armed forces of our country. The French are investing €2 billion in their defence budget; why will the Secretary of State not do so? Is it because the Prime Minister has little sympathy for the armed forces, or because the Secretary of State has little influence?

John Hutton: As the hon. Gentleman knows, defence spending in this country is rising, not falling, correcting a trend that we inherited. It has taken us time to put that right. With great respect to the hon. Gentleman, we will not take lectures on procurement from him or his colleagues because, at best, all that they have promised to do is match our current levels of spending. Until he can come to the Dispatch Box and say that he will spend more, we will take everything that he says with a giant pinch of salt.

Harry Cohen: Will the Secretary of State say why anyone of Pakistani origin should join the armed forces, or give support to the British armed forces, when there will be a widespread feeling that such racist attitudes are prominent? Was it proper for the—

Mr. Speaker: Order. We will let the Secretary of State answer the question.

John Hutton: We are covering the same ground covered by my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) earlier, and I hoped that I had dealt with the point then. The armed forces will tackle discrimination wherever it rears its ugly and unacceptable head, and we have shown that we are prepared to do that. On the fundamental question of why British Pakistani citizens should join the armed forces, they should do so for the same reason that others do: to serve the country in the spirit of public service. We welcome them to do that.

Andrew Robathan: Given that the Government have stated that the two aircraft carriers that were ordered are critical not just to future defence policy and operations, but to the future of the Royal Navy, can the Secretary of State give us a full explanation of how long the aircraft carriers will be delayed and of the impact that that will have on future operations and policy? Why should the rest of the country not see that as a full defence cut?

Quentin Davies: It was not a defence cut in any sense. What we have done is to align better the in-service date of the two carriers with the in-service date of the new JSF aircraft designed to fly off them. The rescheduling of the carriers by between one and two years makes a lot of sense, and is without any cost whatsoever to the nation's defence capability.

Nicholas Winterton: Under the Helix project, the Ministry of Defence is shortly to take a decision on the replacement of three Nimrod R1 aircraft. There is a danger that the Government will order the Boeing Rivet Joint aircraft, which is much older than the Nimrod R1, when instead they could use the MRA4 platform, which would guarantee the jobs that the Government rightly want to achieve at this time of credit crisis. Will they seriously consider the MRA4 platform, and not purchase an older aircraft from overseas?

Quentin Davies: I have noticed the hon. Gentleman's early-day motion on the subject. He makes a forceful and formidable case, as the House always expects him to, in favour of the MRA4 rather than the Rivet Joint. There are points to be taken into account on the other side of the argument, as I know he will appreciate, and no decision has yet been taken.

Desmond Swayne: How many Astute attack submarines will the Minister order?

Quentin Davies: Seven.

Gaza

David Miliband: With your permission, Mr. Speaker, I will make a statement on the appalling situation in Gaza. As the House will know, the fighting continues, but the bald statistics of the rising death toll do justice neither to the scale of the suffering nor to the ramifications of the conflict. I said at the United Nations last Tuesday that the crisis was an indictment of the international community's collective failure, over years and decades rather than just months, to bring about the two-state solution that offers the only prospect of lasting peace in the middle east. However, there are more proximate causes of the current conflict.
	The Gaza truce of June to December 2008 was less than a ceasefire. More than 300 rockets were fired into Israel, 18 Palestinians were killed in Israeli military incursions into Gaza, the humanitarian situation in Gaza went from bad to worse as the Israeli Government restricted the supply of goods, fuel and aid to Gaza, and the political negotiations for a viable Palestinian state proceeded too slowly. However, the immediate trigger for Israeli military action on 27 December was the end of the truce. Hamas refused to extend the lull and instead fired almost 300 rockets into Israel between 19 and 27 December. Those rockets, and the hundreds fired since, were a cruel choice by Hamas to target Israeli civilians and to reject again the fragile peace negotiations that had been taking place between the Palestinian Authority and the Israeli Government since the Annapolis conference in late 2007.
	Whatever the trigger, however, the immediate consequence of the Israeli military action over the past fortnight is very clear indeed: more than 800 dead, many of them civilians and apparently more than 250 of them children—the most terrible statistic of all—and thousands injured. It is the horror of war on top of months of deprivation. The Quartet envoy, Tony Blair, went so far as to call the situation in Gaza "hell". The shortages of food, fuel and medicine are acute. The United Nations Relief and Works Agency had to suspend its activities, which have fortunately been restarted. The Swedish Foreign Minister told me yesterday that a church-run medical centre had been bombed. The scale of the suffering that is already evident, before the full entry of journalists and other personnel, is immense.
	Today, I met a group of leading independent non-governmental organisations that are active in delivering humanitarian aid in Gaza. Every day, those NGOs have to decide whether it is safe for staff to work there. Tragically, several have been killed or injured. The concerns of those NGOs bear reporting to the House. Sixty trucks a day are currently entering Gaza—less than one sixth of the 400 deemed the minimum necessary. The current three-hour daily pause in fighting, although better than nothing, is deeply flawed in its practical effect. The blockages on people leaving Gaza for medical attention are profound.
	Extremely serious allegations about the conduct of both sides during the conflict have been made by the International Committee of the Red Cross and others, and they must be properly investigated. Since the beginning of Israeli military action in Gaza, both the Prime Minister and I have called publicly and privately for an immediate ceasefire. On the first day of the conflict, the UN Security Council, with the support of the British Government, called for an
	"immediate halt to the fighting".
	The EU presidency also called for
	"an immediate end to hostilities"
	and described the use of force as "disproportionate". The British Government support that view. The emergency meeting of EU Foreign Ministers called, with my support, on 30 December for an immediate and permanent ceasefire, urgent humanitarian steps, including opening crossings, and action on the illegal traffic in arms and their components into Gaza.
	On 3 January, we said that the escalation of the conflict to include a ground offensive would cause alarm and dismay—as well as more death and destruction. Those issues were at the heart of three days of negotiations last week at the United Nations. Our priority was for a loud, clear and unified message to come from the Security Council. That was significantly achieved in resolution 1860, introduced in Britain's name, and the product of intensive unified work by Secretary Rice, French Foreign Minister Kouchner and myself, working to find common ground with the Arab League delegation led by His Royal Highness Prince Saud of Saudi Arabia.
	Security Council resolution 1860 is clear in its call for an
	"immediate, durable and fully respected ceasefire"
	leading to full Israeli withdrawal from Gaza. It also denounces all acts of terrorism. It summarises well the British Government's agenda of action in the search for a ceasefire and sets out authoritatively what the international community expects to be implemented. The Prime Minister and I have been working on that over the weekend and will continue to focus on it this week.
	First, relief is needed for the desperate humanitarian situation in Gaza. Emergency aid is essential, and Britain has added $10 million to its aid contribution since the conflict began. We will continue to support the United Nations, the International Red Cross and Red Crescent and other international agencies, which have the infrastructure and expertise to lead the humanitarian response in Gaza. But international aid agencies need the wholehearted support of the Israeli Government, and I urge the Israeli Government to provide it. However, in truth only a ceasefire and opening the crossings on the basis of the 2005 Israel-Palestinian Authority agreement can deliver sustained progress.
	Secondly, there need to be security improvements—above all a curb on the trafficking of illegal arms into Gaza. Those armaments are the source of fear for hundreds of thousands of Israelis, some of whom I talked to in Sderot in November. They are also a threat to any prospect of Palestinian reconciliation, designed as they are to entrench the power of Hamas in Gaza in defiance of President Abbas's call for
	"One Authority, one source of security".
	I spoke twice yesterday to Egyptian Foreign Minister Aboul Gheit on the issue, and commend Egyptian efforts to develop further action on that front, and urge that the direct talks between Egypt and Israel are brought to a conclusion as soon as possible.
	Finally, there is a political imperative to re-establish the unity of the Palestinian people under the leadership of the PA. I continue to be convinced that the division of Palestinian political authority needs to be addressed. Egypt and the Arab League continue to mediate between Fatah, Hamas, and the other Palestinian factions. The aim must be a strong Palestinian Authority, speaking for all Palestinians, committed to the two-state end and peaceful means upheld by the vast majority of Palestinians.
	The United Nations resolution is clear, but so was the response. The passage of the resolution on Thursday night, New York time, was followed within hours by its rejection by both sides to the conflict. The resolution calls on all states in the region to support peace efforts. The Prime Minister and I have been in close touch with the Israeli Government since the onset of the crisis. The Israeli Prime Minister, Foreign Minister and Defence Minister argued strongly against any UN resolution. Their argument is that there can be no equivalence between a democratic state and a terrorist organisation.
	There is and can be no equivalence. Hamas has shown itself over a number of years ready to be murderous in word and deed. Its motif is "resistance" and its method includes terrorism. Israel is, meanwhile, a thriving, democratic state with an independent judiciary. However, one consequence of the distinction between a democratic Government and a terrorist organisation is that democratic Governments are held to significantly higher standards, notably by their own people. That is one reason why we supported resolution 1860—to uphold the standards on which Israel and the rest of us depend. As a beacon of democracy in the middle east, Israel's best defence is to show leadership in finding a political solution to the crisis and comply with the standards of international humanitarian law.
	A week before the onset of a new American presidency, immediate issues of life and death need to be addressed. We are working with Egypt, the US, European partners, Saudi Arabia, Turkey, Lebanon and Syria, all of which are playing a role in talking to various of the parties. The UN Secretary-General is in the region today. The focus of all our efforts is to implement the resolution.
	Over the past 40 years in the middle east, the immediate has become the long term. Short-term conflict has become long-term division. So while the current hostilities require urgent attention and action, so too do the medium and long term, and war cannot address that. The Government stand four-square behind UN Security Council resolutions 1850 and 1860, which call for renewed and urgent efforts by the parties and the international community to achieve a comprehensive peace.
	Security and justice for a Palestinian state depend on a political settlement that defends its existence and cherishes its rights. Security and justice for Israel depend on the same political settlement that cherishes its existence and defends its rights. Our vision must be of two democratic states, Israel and Palestine, living side by side in peace, with secure and recognised borders. As that vision comes under threat, it bears repeating.
	The Arab peace initiative, which offers Israel recognition by, and normalisation of relations with, the 22 Arab League states, and to which Israel's leaders had started at the end of last year to respond favourably, provides the right regional comprehensive vision for progress. However, at a time of war on the current scale, those words can seem worthless. It is the war that pushes them out of reach; and that is one further reason why the current war needs to be brought to an end, before further loss of life renders the vision unattainable, as those committed to necessary compromise are marginalised.
	Mr. Speaker, I hope that you will let me conclude on the following point. Peace benefits Israelis and Palestinians; war kills both. They are destined to live next door to each other. They can do so either as combatants or as neighbours. We are committed to help them do the latter. That is what Israelis need and what Palestinians need; it is also what we need, before it is too late.

William Hague: May I thank the Foreign Secretary for his statement? In common with him, we on the Conservative Benches deeply regret the loss of life on both sides in Gaza, in particular among civilian populations. The situation for Gaza's civilians is clearly desperate, particularly for the 3,000 injured, for the families of the 257 children who have lost their lives, to whom the Foreign Secretary referred, and for the many people in Gaza who may not even support Hamas and who simply want to live in peace, but who find that rockets are being launched from inside their neighbourhoods, which are then targeted by Israeli military operations. We therefore concur with the Foreign Secretary's description of the situation for them and with his calls for action.
	It is also a fearful time, we must not forget, for many Israeli civilians, who live under the threat of ever-longer-range rocket attacks that are expressly intended to kill them. We as the Opposition support the international community's demands and the Government's demands for a ceasefire on both sides. We welcome the passage of UN Security Council resolution 1860, Britain's sponsorship of that resolution and the $10 million in aid that Britain has promised for Gaza.
	The immediate trigger for this crisis, as the Foreign Secretary has described, was the barrage of hundreds of rocket attacks against Israel on the expiry of the ceasefire or truce. Does that not underline the utter tragedy of Gaza in recent years, which has slid further into isolation and poverty, just when the first steps towards greater stability and economic activity are being witnessed on the west bank? I am sure that the Foreign Secretary will agree that whenever we discuss Hamas we should remind ourselves that it has made no progress towards the Quartet principles of recognising Israel, renouncing violence and accepting previous peace agreements, and that it must do so before it can be accepted as a negotiating partner.
	Does the Foreign Secretary agree that it is nevertheless not in Israel's interests that this conflict should continue for a long time, because it risks escalating the situation on other borders, such as that with Lebanon, because it may allow Hamas to declare victory simply by surviving the onslaught, and because it risks damaging the whole middle east peace process? Bringing the conflict to an end clearly requires a ceasefire on both sides. It is surely right that Egypt is looking in its mediation for a ceasefire that involves not only an end to military operations, but the effective prevention of arms smuggling into Gaza, in particular if the crossings are to be reopened.
	Given that the Security Council resolution has failed to bring a stop to the violence, despite all the international efforts, and that the Foreign Secretary rightly urged that talks between Egypt and Israel come to a conclusion as soon as possible, does he have any indication that that might happen in the coming hours or days? Will he say a little more about the initiatives taken by Turkey and whether he expects those to bear fruit in the coming days?
	The Foreign Secretary spoke of acute shortages of medicine. Can he tell us whether any international aid is getting into Gaza's hospitals at all? Can he also say what assessment has been made by the UN of the damage in Gaza and of the steps needed to restore its electricity and water supply, and supply shelter for those whose homes have been destroyed? Can he say more about the potential for a mechanism to prevent the smuggling of arms into Gaza? What exactly might that involve, and what role could be envisaged for Britain in that mechanism?
	Does the Foreign Secretary expect any ceasefire agreement to provide for the opening of Gaza's borders? This is a question not simply of aid but of trade and of the movement of people, so that the people of Gaza can hope for a better life. Can he say whether steps are being considered to resume the EU's border monitoring mission at the Rafah crossing into Gaza, and under what conditions that might happen?
	The immediate priority must be to achieve a ceasefire and to address the humanitarian crisis, but we must not lose sight of the need to push the middle east peace process forward urgently when those things are in place, in order to break the vicious cycle of ceasefires and violence, and to achieve a peace settlement that will deliver a Palestinian state. We all look to a new US Administration to provide the sustained leadership and impetus needed if all sides are to make the necessary compromises, including on the part of Israel with regard to settlements on the west bank.
	Does the Foreign Secretary agree that the long-term security of Israel will depend on its readiness to be as bold in seeking peace as it has been in using military force? We hope that the Government will take every opportunity to urge the new US Administration, supported by their allies, to place the middle east peace process among their top foreign policy priorities, so that, out of the terrible bloodshed of the past two and a half weeks, some hope for the future might at last emerge.

David Miliband: Let me address some of the right hon. Gentleman's questions. First, in respect of Hamas, it is important to recognise that talks did take place, sponsored by Egypt, on a so-called reconciliation between the Palestinian Authority, led by President Abbas, and the Hamas leadership in Gaza. Those talks were due to conclude in November at a meeting which Hamas decided not to attend or to participate in. The hopes for a so-called technocratic government—or even a national unity government—for 2009 were therefore dashed. That is obviously a significant part of the split that currently exists, and does no good at all to the Palestinian cause or, I would argue, to Israel's search for a proper partner to negotiate a peace process.
	The right hon. Gentleman wondered whether the current conflict was in Israel's interest. It is obvious from the fact that we have been calling for an immediate ceasefire, as has he, that we think that it is in Israel's interest as well as in the interest of the Palestinians who are under fire that the war needs to end as soon as possible—immediately. I think that he asked for a prediction on whether it would end in a matter of hours or days, but I am sure that he will understand if I say that it would be foolish to make such a prediction. I can tell him, however, that the two conversations that I had yesterday with the Egyptian Foreign Minister suggested that, while there is a degree of urgency—representatives of Hamas were in Egypt yesterday—there are also fundamental issues that need to be overcome if the two sides, which are currently saying that they do not want a ceasefire, are to embrace one.
	In regard to the situation on the ground in Gaza, some aid and medical equipment are getting in. In my meeting with the non-governmental organisations today, it was important to note that they are fully focused on the need to get aid in while the crisis continues as well as on planning for the post-conflict efforts. At some level, it must seem absurd to be talking about humanitarian aid in a condition of war, but of course, for some people, that can mean the difference between life and death. It is therefore important that we support it, and that is also why I believe that the Israeli Government should co-operate with the NGOs. In regard to a UN assessment, I think that we shall have to wait, in the short term, for the Secretary-General's report after his visit this week. However, it will take longer for more people to be able to get in and make a proper assessment.
	In respect of the smuggling of arms, the right hon. Gentleman will know that the estimate of the number of tunnels is now above 200. Their presence is incentivised not least by the fact that the closure of the crossings means that even non-arms trade has to go through the tunnels. That is why the issues of smuggling and of the tunnels go together. Action needs to be taken on the smuggling simultaneously with the opening of the crossings. Unless the crossings are open, we will not be able to crack down on the smuggling, which is getting flour, never mind arms, into Gaza.
	There is technical support that can be offered to the Egyptian Government, however, and that is being done. Also, under the 1979 Egypt-Israel peace treaty, a multinational force of observers is posted in Sinai, providing some international presence. The right hon. Gentleman will know that, as well as the issue of tunnelling from Egypt into Gaza, there is the matter of traffic through Sinai and Negev and working with the Bedouin on that.
	The right hon. Gentleman asked about the European presence. European observers ready to man or provide a European presence at the crossings are in the middle east now, but they have not been able to deploy because the crossings are closed. The presence is ready to deploy as soon as the crossings are open, and it is certainly our view that they should be opened as part of a ceasefire deal.
	The right hon. Gentleman talked in passing about the west bank. I want to say a word about this, as many people will have been deeply concerned at the prospect of a call by Hamas for a third intifada on the west bank creating a further source and scene of carnage in the middle of this crisis. It is hugely to the credit of the Palestinian Authority—of President Abbas, Prime Minister Fayyad and their security forces—that no such intifada has taken place. That is partly a product of security, but it is also a product of the economic and political leadership that has been significant over the past year. The right hon. Gentleman is, of course, right that if a final settlement is to create the viable Palestinian state that we believe is necessary not just for the Palestinians but for the security of Israel, it needs to be based on the 1967 borders.

Mike Gapes: I welcome the Foreign Secretary's measured and comprehensive statement and pay tribute to the role that he and our diplomats in New York played in the adoption of Security Council resolution 1860. Does my right hon. Friend agree, however, that it is not just regrettable but deplorable that both Hamas and the Government of Israel summarily rejected that resolution? Is it not also deplorable that the United States Administration, having said that they supported the resolution, could not bring themselves to vote for it? Did that not send the wrong signal from the US Government to hard-line elements in the coalition in Israel, and thus produce the wrong result?
	The Foreign Secretary said that the Arab League and Egypt are engaged in dialogue with Hamas. In the process of getting a conclusion to this conflict and the beginnings of the necessary settlement, is it not time that the Quartet allowed its representative, Tony Blair, and other representatives to engage directly with Hamas, too, in order to move them to the Quartet principles of non-violence, recognition of the state of Israel and abiding by previous agreements?

David Miliband: In respect of the US abstention, we would of course have much preferred to see US support for the resolution, as the middle east depends on strong United States engagement and leadership. However, the fact that Condoleezza Rice should say in the explanation of vote that she supported the objectives and contents of the resolution is significant. My hon. Friend is none the less right that the middle east needs strong American leadership if progress is to be made.
	It is important to say that a lot of people are talking to Hamas. Egypt is talking to Hamas—mandated by the Arab League to speak on its behalf. Turkey, Syria and Qatar are speaking to Hamas, and Norway has made it clear that it speaks to Hamas as well. So there is no shortage of people speaking to Hamas. In respect of the ceasefire, it is vital that they do speak to Hamas. In respect of any negotiation on a Palestinian state, it is important to take our lead from the elected leader of the Palestinian people, President Abbas, who is seeking unification of the Palestinians under legitimate leadership that is committed to peaceful ends and, in negotiations on a two-state solution, to recognising the state of Israel, which seems to me to be a precondition for effective negotiations.

Edward Davey: I thank the Foreign Secretary for his statement and welcome the fact that the UK Government have shown some leadership on this issue by drafting Security Council resolution 1860, calling for a ceasefire and the withdrawal of Israeli troops from Gaza. I welcome his criticism of the Bush Administration for their abstention. In our view, that was a diplomatic disaster.
	The Foreign Secretary must be aware that many in this House and across Britain believe that the UK and the international community have failed the people of Gaza over the past two weeks. In trying to be balanced and rightly condemning Hamas for the rocket attacks, the Prime Minister and the Foreign Secretary have at times seemed unbalanced in the face of a truly unacceptable level of Israeli military might. Indeed, in trying to be balanced the British Government have at times fallen off the tightrope of truth—when the Foreign Secretary initially refused, unlike the French President, to call this Israeli action disproportionate.
	I welcome the Foreign Secretary's statement that serious allegations about the conduct of both sides should be investigated. Will he press at the UN Security Council for an independent fact-finding mission to lead that investigation into all allegations of breaches of international law by all sides? He is aware of the danger of the Gazan conflict's creating tensions between communities here in the UK. Surely a call for such an investigation would help to calm that situation.
	As for actions to persuade the Israelis and Hamas to desist the fighting and rocket attacks, why have neither the UK nor the EU implemented an arms embargo against Israel, just as the Conservative Government did in 1982 in response to Lebanon? No one in 1982 expected an arms embargo to stop the Israeli tanks in their tracks, but it was a powerful international symbol and we need that now. The Foreign Secretary's predecessor, the right hon. Member for Derby, South (Margaret Beckett), assured this House that the Government would keep a close eye on the use of British arms by Israel. Government policy is that
	"no weapons, equipment or components which could be deployed aggressively in the Occupied Territories would be licensed"
	for export. Can he assure the House that none of the weapons or weapons components used by the Israel defence forces in Gaza came from Britain, and if he cannot, have the Government changed their policy on arms to Israel?
	As for Hamas, has the Foreign Secretary used his newly improved relations with Damascus to get Syria to urge Hamas to end their rocket attacks? What help has been offered to the Egyptians to stop the smuggling of weapons into Gaza?
	One of the many tragedies is that the Israeli attack was never and is never going to bring the peace and security that Israel rightly should have. The truth is that this Israeli action may hurt Hamas militarily, but it will strengthen them politically. I fear that Israel is driving moderate Palestinians into the arms of the extremists, and that will be a disastrous strategic defeat for Israel, whatever the ceasefire terms eventually agreed.

David Miliband: I am sorry about some of the things that the hon. Gentleman said, given that we actually agree that the only way for Israel to guarantee its security and to provide justice for its own people—never mind for the Palestinians to provide security and justice for themselves—is to negotiate a political solution and to empower precisely the moderate forces in Palestine that are so important. I am sorry, for example, that he insists on saying that we did not support the European Union statement that the Israeli action was disproportionate. We did, when it was proposed, and out it has come and I have repeated that today.  [ Interruption. ] I am sorry; the hon. Gentleman says "not initially", and that is not true. If we had not supported it, it would not have gone out, because it requires the support of all sides.
	The hon. Gentleman raised an important question in respect of the arms embargo, and I want to confirm that our position remains exactly as described. No arms exports are granted where there is a clear risk that those arms could be used for internal repression or external aggression, and that is surveyed very closely. Also, we have no evidence of any of the exports that he has pointed to being used in this operation. As for some of the allegations that are around—for example, in  The Guardian on Friday, which the hon. Gentleman did not repeat, but it might help the House if I make this point clear—there is no truth in the suggestion that those exports are used by the IDF or are being used by the IDF in this operation. I assure him that the criteria that we use remain very strict, and they were recently examined in judicial review to confirm the way that they operate.
	On Syria, I have indeed twice spoken to the Syrian Foreign Minister Muallem to urge on him that if he does want to advance the Palestinian cause, he needs to argue for the ceasefire that is so desperately needed.

Peter Kilfoyle: I note the rather cosy consensus between the Foreign Secretary and the right hon. Member for Richmond, Yorks (Mr. Hague), but I can assure the Foreign Secretary that it is not shared by all of us. On armaments for Israel, he said just a moment ago that he would very much like to see the prevention of arms going to terrorist organisations. That is the case for everybody in this House, and on the basis of what we have just heard and what he himself just said, will he undertake to ensure that no arms at all go to Israel at the moment, given that it is guilty in many people's eyes of state-sponsored terrorism with its activities in the Gaza strip?

David Miliband: As I said in my statement, I do not think that it is right or appropriate to compare a democratic state with a terrorist organisation or an organisation that uses terrorist means, and I hope that, on reflection, my hon. Friend will agree with that. On arms sales to Israel, I wish to emphasise that if there is a clear risk that armaments would be used for internal repression or external aggression, those exports do not take place, and those rules are, in my view, right.

Michael Howard: Even at this dark hour, when the situation is clearly desperate, is there not the faint sign of a glimmer of hope on the horizon? Is it not the case that only the President of the United States has the means to secure the concessions from both sides that are necessary to achieve a viable Palestinian state and a lasting settlement? Is it not therefore welcome that President-elect Obama has said that despite all the many other challenges he faces, he will make this region an immediate issue of priority for him, in sharp contrast to the neglect of the current American Administration?

David Miliband: I am worried about any suggestion that there would be a cosy consensus, but it might be more welcome to have a consensus on the point that the right hon. and learned Gentleman has made. He is, of course, right to say that the current crisis in Gaza is, in part, an indictment of a delay in engagement by the international community, including the United States, in resolving this issue. He is also right to say that the issue cannot be resolved without the United States. My own sense is that, in many ways, this crisis, this war, this conflict makes the job of the Obama Administration more difficult, but it makes their early engagement more necessary. I believe that there are people at the top of the Obama Administration, led by the President-elect himself, who recognise that this is not just a regional issue, but a global one. It concerns us all and I very much look forward to the engagement from day one, which the right hon. and learned Gentleman and I agree is necessary, of the new Administration on the issue.

Louise Ellman: I support all efforts to bring about a speedy and peaceful solution to this dreadful conflict. Does the Foreign Secretary agree that to do that, he must address the responsibility of Hamas for this dreadful situation? That includes the statements in Hamas's charter that propose to make Israel the subject of an Islamic Waqf for ever, that promote jihad and the cult of death and extol martyrdom, as well as Hamas's practice of callously booby-trapping civilian areas and deliberately encouraging the deaths of civilians in Gaza today.

David Miliband: Certainly many statements by Hamas are grotesque and chilling, and it is essential that Hamas plays its part in achieving, at least in the short term, the ceasefire that is necessary and, in the longer term, the Palestinian reconciliation that will be essential to provide some leadership for the Palestinian people which can negotiate with Israel. The centrality of the conflict goes to the heart of the fact that for a Palestinian state to be viable it must include Gaza and the west bank—there are 1.5 million Palestinians in Gaza. At stake in this conflict is the viability of that future Palestinian state, which is essential for Israel's security as well as for justice for the Palestinians. That is why the stakes are so high and why all must play their part. It was precisely that point that I made late at night in New York when the resolution was adopted; I talked about the responsibilities that there are on all sides—not just on Israel, Hamas and the regional players, but on the wider international community—if this running sore is to be addressed.

Patrick Cormack: In agreeing particularly with what the right hon. Gentleman has just said, may I ask that after he leaves the House and goes back to the Foreign Office he will summon the Israeli ambassador and say to him calmly but clearly that many of us who have been in this House for a very long time and who have been proud to call ourselves friends of Israel now feel ashamed because Israel is not behaving as a civilised state should behave?

David Miliband: I am sure that even if the Government of Israel and their ambassador are not watching this statement and discussion, they will be following its contents later in the day. We are in close touch not only with the ambassador of Israel but, directly, with the Prime Minister, Foreign Minister and Defence Minister of Israel. It is very important that this does not become an argument about whether or not one is pro or anti-Israel or pro or anti-Palestinian; the peace about which all hon. Members have spoken needs to be peace both for Israelis and Palestinians—that is at the heart of this issue.

Richard Burden: In welcoming the genuine efforts that my right hon. Friend has made to bring about a ceasefire and the emphasis that he has put on the need for rocket attacks on southern Israel to cease, will he agree that at a time when the UN has estimated that the death toll stands at 884 people dead in Gaza, 275 of them children, we should now say to Israel that abiding by international law is not an optional extra to be implemented at a time that it finds convenient, but a requirement on it? Will my right hon. Friend confirm that, as a high contracting party to the fourth Geneva convention, Britain has a responsibility to ensure the protection of civilians in time of war? Finally, when there are rumours of an international force being deployed in Gaza or on its borders, can he assure me that such a force, if deployed, will have a remit that includes the protection of Palestinian civilians just as much as of Israeli civilians, and the ensuring of access into Gaza just as much as preventing the smuggling of arms into Gaza?

David Miliband: It is important to condemn all loss of innocent life, whether Israeli or Palestinian. It is also important, to reiterate what I said in my statement, that member states of the UN and democratic states are deliberately held to higher standards. They should certainly adhere to the various conventions to which they have appended their signatures. That is why I referred in my statement to the importance of international humanitarian law.
	In respect of a force in Gaza, it would be premature to pre-empt some of the discussions that are going on, and some of the very difficult issues that are associated with them, but certainly any observer or other force would need to ensure that it defended civilians without fear or favour. It is premature to talk about that at this stage, given the emphasis on opening the crossings and the smuggling issue. However, I hear what my hon. Friend says.

Menzies Campbell: But is not the blunt truth that while we discuss this the Israeli Government persist in disproportionate military action, using F-15s, F-16s, Apache helicopters and tanks at a terrible cost to human life? If any other democratic state were behaving in that way, would we not by now be considering what other economic and diplomatic steps were available to us? Are the Government considering any such steps?

David Miliband: We do not believe that economic sanctions on Israel are the way to engage or to influence Israel—[Hon. Members: "Why not?"] We do not believe that the isolation of Israel is the way to achieve influence with it. We should give the same clear message in public and in private, as the Prime Minister and I—and every other representative of the Government—have done over the past three weeks. Of course, the right hon. and learned Gentleman is right that the scale of the killing has put this issue on the global agenda in a way that is, even in the middle east, unprecedented in the nature of its coverage. That is why everything must be done to deliver the ceasefire that we all agree needs to happen immediately.

Ann Clwyd: I was present some years ago in Jenin, during the siege of Jenin. I saw then the refusal of the Israelis to allow humanitarian aid to be provided to those who were injured and sick. Now we see that yet again. It is an absolute disgrace that any country that calls itself a democracy refuses to allow the humanitarian agencies to deliver aid to those who are desperately in need.
	I also think that the exclusion of journalists from the area is totally unacceptable. Were it not for al-Jazeera, we would see no pictures on television of the suffering and destruction taking place in Gaza at present. Will my right hon. Friend make the point that it is essential to allow journalists access?

David Miliband: I agree on both points with my right hon. Friend—the entry of journalists, to which I referred in my statement, and the essential nature of the humanitarian obligations that Israel needs to follow. The points that the humanitarian NGOs made today—not only about the medical situation, but about food and fuel—deserve not just to be heard, but to be acted on.

John Maples: Would the Foreign Secretary not agree that those who so vigorously criticise Israel would carry greater credibility if they had made similar criticisms over the years of the suicide bombings and rocket attacks deliberately aimed at civilians in Israel? I completely agree with him that we need to see a two-state solution, but may I urge him to recognise that if we are to achieve such a solution it will be achieved largely with the leverage of the United States not through the United Nations, the Quartet or the European Union? With a new United States Administration there is really a chance, and I urge the Foreign Secretary to use whatever influence he has with them to get their full commitment. We very nearly got there in 2001 at the end of the Clinton Administration at Camp David and then at Taba. Those positions could now be built on because they are endorsed by most of the Arab countries in the Arab peace initiative. There truly is an opportunity for Mr. Obama.

David Miliband: The whole House can be in no doubt that that will be at the top of our agenda when I meet and talk to Mrs. Clinton straight after 20 January.

Gerald Kaufman: In congratulating my right hon. Friend on steering resolution 1860 through the United Nations Security Council, may I ask him what the international reaction would be if Hamas had slaughtered nearly 900 Israelis and subjected nearly 1.5 million Israelis to degradation and deprivation? Is it not an incontrovertible fact that Olmert, Livni and Barak are mass-murderers and war criminals— [ Interruption. ] Yes. And they bring shame on the Jewish people whose star of David they use as a flag in Gaza, but whose ethos and morals go completely against what this Israeli Government are doing.

David Miliband: I think that the history and origins of the state of Israel make this conflict especially acute, especially distressing and especially painful. However, Israel should be held to the same standards as other nation states. The Jewish people have suffered enough for their history and deserve to be held to the same standards as every other nation state. I believe that the obligations that they have need to be fully implemented without fear. They need to be addressed as a matter of urgency. The democracy that Israel rightly treasures, which is rightly seen as a beacon throughout the world, needs to ensure that the actions of its Government fully adhere to the country's obligations.

Nicholas Soames: Has the Foreign Secretary warned the Government of Israel that despite the very grave provocation they have suffered, they are acting contrary to the laws of war?

David Miliband: I have not given Israel any legal position of that kind, but at all stages I have stressed the importance of the commitments that all member states of the United Nations have, both in advance of the conflict and during it. It is right, therefore, that we say that any abuse should be properly investigated promptly and expeditiously.

Andrew Dismore: Would my right hon. Friend agree that any ceasefire must involve both sides and, in particular, an end to rocketing by Hamas and the smuggling of arms? Would he also confirm that the Foreign Ministry of Egypt, which also has a closed border with Gaza, warned Hamas immediately before the Israeli action that it should cease the rocketing when it fired 60 rockets at Israel immediately before the visit of the Foreign Minister of Israel to Egypt to try to broker peace?

David Miliband: My hon. Friend is right that leaders across the Arab world had been warning Hamas for some time not to provoke Israel. Equally, they had been warning Israel not to respond to the provocation.

Malcolm Rifkind: Will the Foreign Secretary agree that Hamas appears to love Palestine more than it loves the Palestinians, given its willingness, as far as we can understand, to put rocket launchers and other military assets in the vicinity of mosques, schools and other civilian institutions? Will the Foreign Secretary indicate whether the information available to him confirms that that has been part of Hamas's tactics in the recent past?

David Miliband: I would put nothing past Hamas. It is important to remember that there is not only a Hamas leadership in Gaza but a Hamas leadership in Damascus, which is rather a long way removed from the conflict and is participating in all the talks while perhaps suffering less of the immediate pressure that the Hamas leadership in Gaza is under. Gaza, as everyone has read in their newspapers over the past few weeks is, quote, unquote, the most densely populated place in the world. I have no direct evidence of the sort that the right hon. and learned Gentleman provides but it is obvious to anyone who wants to look that Hamas makes at a minimum no effort to shield its civilians. There is a pretty good suggestion that it is quite happy to see the distinction between the interests of Palestinians and the notion of Palestine for which it claims to speak to which the right hon. and learned Gentleman referred.

Marsha Singh: Will my right hon. Friend accept that condemnation has brought no relief to the people of Gaza? The killing goes on. Is it not time for stronger action? Is it not time that we expelled the ambassador of Israel and brought our ambassador back from Israel? Is it not time that we called for international sanctions against Israel?

David Miliband: My hon. Friend is right to say that there has been a collective failure, because the internationally expressed will of the community of nations has not been followed either by Hamas or by Israel. However, I do not agree that a policy of isolation would help either Britain's influence or the prospects of peace in the middle east. It is very important that we continue to speak without fear or favour on these issues—that we speak publicly, using occasions such as this, but that we use the opportunity to speak privately as well.

Sarah Teather: If and when the terrible bombing of Gaza ever finishes, what hope does the Foreign Secretary have for the reconstruction of Gaza? It is all very well international Governments pledging aid to the Palestinian people, but if there is still an embargo on concrete and construction materials crossing from Israel to Gaza, we shall not be able to do the rebuilding that those people desperately need.

David Miliband: That is precisely why the opening of the crossings on the 2005 basis is so important. However, it would be the height of complacency to stand here watching the conflict and talk about hopes for peaceful post-conflict reconstruction. The truth is that none of us yet knows the full scale of the devastation that has taken place or the extent to which the infrastructure has been destroyed, but I can tell the hon. Lady that aid agencies as well as Governments are thinking about both the immediate and the medium term, which we desperately need to do. However, political infrastructure as well as concrete infrastructure will be important if the people of Gaza are ever to be relieved from their current suffering.

Peter Hain: Would the Foreign Secretary agree that the terrible horror unleashed in and around Gaza represents an epic failure of foreign policy on all sides and that we need a new approach? The messages coming from President-elect Obama's team, reported at the end of last week—making direct contact with opponents, including Hamas and seeking to negotiate an end to the conflict—stand a much better prospect of succeeding, because in the end we do not solve conflicts such as this by military means, as we learned in Northern Ireland. We solve them politically.

David Miliband: We do indeed solve them politically and I believe a new approach is on the table. It is a comprehensive approach to the problems of the middle east, recognising that while the Israel-Palestine conflict is the core of the middle east problems, issues in respect of Syria and of Lebanon and the Golan heights and the Shebbaa farms are also part of the picture, as is the fundamental fact that in the end security for Israel does not come from the Palestinian state alone—it comes from the normalisation of relations with the whole of the Arab world. That is why before the Christmas break we were talking in the House about the importance not just of a two-state solution but of a 23-state solution. I believe that new approach will be essential, more akin to the approach of the Madrid negotiations than the Annapolis negotiations.

George Galloway: The Foreign Secretary is not in favour of the isolation of Israel but he was in favour of the isolation of the Government elected in Palestine, in the only free parliamentary election ever held in any Arab country, because the people voted the wrong way. He joined the siege of the Hamas Government and helped create the desperation that led to the barrage of rockets—largely ineffectual, as he has conceded. Action speaks louder than words. The resolution he boasts of drafting is an ineffectual section 6—

Mr. Speaker: Order. I must stop the hon. Gentleman. He must ask a question. He is up there making a speech but he has not asked a question. He knows the rules of the House well enough. Ask a question.

George Galloway: I will, Mr. Speaker. Why will the Government not recall our ambassador from Tel Aviv, ask the Israeli ambassador to leave, and, above all, stop selling British weapons to the mass-murderers who are taking so many lives and limbs in Palestine today?

David Miliband: The hon. Gentleman has no evidence at all of British arms being used to take lives and limbs in Gaza. Withdrawing our ambassador from Israel, or kicking the Israeli ambassador out of London, may be the sort of gesture politics that the hon. Gentleman thinks is effective, but I do not think that it would achieve anything when it comes to making the sort of progress that all of us in this House want to see in the middle east.

Karen Buck: That there are two sides to the escalation of the conflict is beyond doubt, but the appalling disproportion in the civilian casualties demonstrates that there is collective punishment of the civilian population of Gaza; that is what is shocking people around the world. My right hon. Friend rightly stressed the importance of a unified voice for the Palestinian people, but does he agree—and can he convey the fact—that that has been fatally undermined by the failure to ensure that the Palestinian people are incentivised and rewarded for pragmatic negotiation? In particular, illegal settlement building has been a major contributory factor. Can he convey that message to the Israeli Government?

David Miliband: Well, yes. I not only can convey it, but think that the Prime Minister and I have been conveying it. It is precisely that point that the Prime Minister addressed in his speech to the Knesset. Settlement building is not just an encroachment on the future Palestinian state; it is also illegal and a massive block on the work of, and the appeal made by, the peaceful, committed, moderate leadership of the Palestinian people, so there is a double or triple tragedy at the heart of the settlement process. My hon. Friend is absolutely right to highlight the fact that the issue of the settlements, and what they do to the prospect of a Palestinian state based on 1967 lines, must be at the heart of any discussion that goes beyond the immediate crisis. I spent a lot of last year saying that the window of opportunity for a two-state solution is closing. That is in part because the longer settlement building goes on, the harder it will be to draw up, conceive and then deliver the Palestinian state that will be essential for any sort of stability in the middle east.

Michael Ancram: Following on from the question of the right hon. Member for Neath (Mr. Hain), does the Foreign Secretary agree that achieving a lasting, as opposed to short-term, ceasefire will in the end require dialogue between Israel and Hamas, either direct or indirect, however difficult that may be, in order to agree the terms of any such ceasefire? What role does he think that he or the British Government can play in bringing about that dialogue?

David Miliband: Obviously, the answer is yes; indirect talks are happening now, precisely on the subject of the ceasefire—long-term, not just short-term—that the right hon. and learned Gentleman talks about. It is important to go back to the point that the Arab League has mandated Egypt to engage with Hamas, on its behalf and on behalf of the international community, on the issue of Palestinian reconciliation and the ceasefire, and I think that that is the right approach. The truth is that the door is open to Hamas, if it is willing to recognise the fact that an Israeli state has to be part of the solution. That is what is set out in resolution 1850, passed three or four weeks ago, in its references to the Quartet principles and the Arab peace initiative. However, Hamas needs to recognise its negotiating partner. I know that the right hon. and learned Gentleman feels strongly about the subject, but it is important to point out that people talk about Hamas being the representatives of Palestinians, without recognising that there is an elected leader of all the Palestinians—a President of the Palestinian Authority, elected in 2004 by all Palestinians to represent them. A further President will be elected this year or next year. That is a vital part of the issue, and we should not fall into the trap of allowing Hamas's leadership in Gaza to claim that it represents all the Palestinians.

David Winnick: Would my right hon. Friend accept that the reason why there is such strong emotion in the House of Commons today is that, in the past week, the Israelis have shown total indifference to the suffering and lives of Palestinian civilians, and that some of the Israelis' actions amount to war crimes against humanity? In those circumstances, is it not clear that a stronger approach is required by Britain, and that it should tell the Israelis that what they are doing is totally unacceptable and an affront to humanity?

David Miliband: My hon. Friend's diagnosis is right: that is why there is such passion in the House, allied to the fact that the repercussions of conflict in the middle east echo around the world. The truth is that the easiest recruiting sergeant for extremism anywhere in the world is the absence of a Palestinian state, so for those two reasons the issue reverberates around the world. If words brought peace, they would have done so a long time ago, not just in this conflict but in the wider middle east, but I can assure my hon. Friend that we will continue to speak loud and clear, publicly and privately.

Richard Younger-Ross: In the early hours of the morning of 30 December, the Gibraltar cargo ship, the Dignity, was rammed by an Israeli gunboat. It was carrying aid and three doctors to Gaza, one of whom was my constituent, David Halpin, who has a proud record of trying to take aid to those beleaguered people. In response to that attack, a Foreign Office spokesman said that
	"we told the Israeli Government that we take the safety of our nationals seriously".
	Can the Secretary of State say what that means, and what action he will take to ensure that a ship sailing under British protection is protected? Will he make sure that that crime on the high seas is brought firmly to the attention of the Israeli ambassador?

David Miliband: The first action I will take is find the details of the case and write to the hon. Gentleman as a matter of urgency. I will make sure that I place a copy of that letter in the Library of the House.

Chris Mullin: Has not the time come to recognise that neither the British Government nor other EU Governments have any serious influence at all over the Israelis? We should recognise, as other Members have suggested, that these are war crimes that we are witnessing in Gaza, and start talking with our EU allies about organising sanctions and, at the very least, stop selling weapons to the Israelis, and perhaps talk about the withdrawal of our ambassador, because those are the only things that will make any impression on the people currently running Israel.

David Miliband: We have covered some of those issues in the course of our discussions, and I take seriously my hon. Friend's views, although he will know from my earlier answers that I do not agree with him on all those points. However, in respect of allegations of war crimes, any such allegation or any breach of international humanitarian law must, of course, be investigated.

David Winnick: These are war crimes.

David Miliband: Well, in that case, they must be investigated. The right thing to do with any allegations of such seriousness is to investigate them, find out if they are true and, if they are, take appropriate action. That is what should happen.

Anthony Steen: In view of the fact that the Foreign Secretary is in touch with the Israeli Government and the Prime Minister—I have just returned from Israel and saw for myself what has been talked about in the House—is he aware that, as far as I was told, the Israeli Government would stop their attack on Gaza, the shelling and all the devastation if the rockets stopped coming from Gaza tonight? Is that correct?

David Miliband: I am certainly aware of all the statements that have been made, on both the Israeli and the Hamas sides. There must be simultaneous cessations—that is the only way in which this will be finished, and that is what we are working for.

Michael Meacher: As this brutal and utterly disproportionate blood letting continues, will my right hon. Friend use all his influence in the EU as part of the Quartet to try to ensure that, whatever ceasefire agreement is finally reached, it is firmly linked to a further, wider process of negotiation aimed at securing a comprehensive peace treaty between the Arab states and Israel, as the Saudis themselves proposed in 2002; the withdrawal of all Israeli forces to pre-1967 borders; and the creation of a viable Palestinian state, without which there will be no end to this century-long conflict between the Arab states and Israel? What contact has my right hon. Friend had with President-elect Obama or his team to secure those ends?

David Miliband: I obviously agree that any ceasefire must be swiftly followed by precisely the sort of development of the vision of a lasting, comprehensive peace that my right hon. Friend described. He talked about linking the ceasefire to such a programme. The ceasefire will be hard enough to get in and of itself, but I certainly agree that it must be swiftly followed. In respect of President-elect Obama, it is important to say that it is not just a public line that the Americans are saying that there is one President at a time and one Secretary of State at a time; that is the reality. However, I can assure my right hon. Friend of my confidence that the issue will be high on the agenda of the Administration come five minutes past 12 on 20 January.

James Arbuthnot: Does the Foreign Secretary accept that while most of life is a matter of varying shades of grey, it is a black and white matter that Hamas is a terrorist organisation which sets out to kill civilians? My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) talked about "a glimmer of hope". Is there any glimmer of hope that Hamas could be persuaded to stop its rockets for good, in which case Israel would be able to do what it dearly would like to do—namely, leave Gaza for good?

David Miliband: The right hon. Gentleman is right that Hamas uses terrorism to further its ends and some of its commitments in its charter that were referred to by my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) are utterly grotesque. It would be wrong to start saying that there are glimmers of hope here or there. What I can say, and what I believe, is that there are some people in Hamas who recognise that there needs to be a politically negotiated solution to the conflict. That is an important part of the equation. However, the truth is that they are not the majority in Hamas, and that is the tragedy at present.

Several hon. Members: rose —

Mr. Speaker: Order. We now come to the main business.

Point of Order

Jeremy Corbyn: On a point of order, Mr. Speaker. You will have seen the large number of Members wanting to take part in the discussion about Gaza. Have you had any representations from the Government to allow a debate in Government time immediately or as urgently as possible on the situation facing the people of Gaza and the Palestinian people as a whole?

Mr. Speaker: I have not had any communication from the Government, but I will let the hon. Gentleman know if I do.

Business Rate Supplements Bill

[ Relevant Documents:  The Seventh Report from the Communities and Local Government Committee, Session 2006-07, Local Government Finance: Supplementary Business Rate, HC 719; and the Third Report from the Committee, Session 2007-08, Local Government Finance — Supplementary Business Rate: the Government's response, HC 210, and the Government's response, HC 1200, Session 2007-08. ]
	 Second Reading

Mr. Speaker: I have to inform the House that I have selected the amendment in the name of the Leader of the Opposition.

John Healey: I beg to move, That the Bill be now read a Second time.
	We are living through a time of great economic upheaval and uncertainty, global in its origins but local in its impact on businesses and communities right across Britain. We in Government are committed to doing what we can to help people through these tough times and to prepare for the upturn that will follow. Actions such as recapitalising the banks, targeted tax cuts, loan guarantees, programmes of public spending and support for jobs are necessary measures for the present. But even as we take action to cushion the blows of recession, we are also looking to the future. We do not want to make the mistakes of previous recessions by not continuing investment in major projects, in skills and in business support and by not putting in place policies that may help local areas to recover more rapidly and take more advantage of the upturn when it comes.
	The Bill is part of the policy framework needed to prepare for the other side of the downturn. Let me be clear with the House from the outset. We are not imposing a new business tax, but introducing a new power to allow local authorities—with strong safeguards for business—to raise some of the money needed to boost local business and the local economy in the longer term.

Bob Spink: The Minister is aware that there are many very good councils, but there are some councils that do not listen and do not consult properly even their residents, let alone businesses, which do not have a vote. Can he give an undertaking that businesses will have a vote on all levies, at whatever level they are proposed by the councils?

John Healey: I will not give that undertaking, but I will give a fuller outline and an explanation a little later, and they will set out the circumstances and the principal case in which businesses would and should get a vote. The hon. Gentleman may wish to consult the leader of his local county council for his view on the issue; he is an innovative council leader interested in the fact that this power could allow Essex to raise more than £12 million each year with the 2p business rate supplement. That money could be used in his county for all sorts of economic development projects.

John Redwood: Will the Minister tell the House how much he thinks this measure might raise in the full year once it is up and running? It is, in practice, a tax on business.

John Healey: As I have just explained, we are not imposing a tax on business but putting in place a power through which local authorities can, with safeguards for local business, decide to introduce such a levy. We reckon that a supplementary business rate in London, which is likely to be where this is first put to the test, would raise perhaps £170 million a year. The right hon. Gentleman will know that that is an essential element of the funding package to support Crossrail. It will allow the Tory Mayor and the London assembly to discharge their commitments and responsibilities to contribute to that funding package precisely because it is a major economic project that could bring great benefit to businesses across London. Therein lies the principal case for such a power and for that power being available in other parts of the country.

Richard Ottaway: The Minister said that Crossrail will bring benefits to businesses across London. My constituency is the southernmost in London, and I assure the Minister that a small business in Coulsdon will derive no benefit whatever from Crossrail. Where on earth is the equity? Where is the fairness in having the Greater London authority impose a business rate for Crossrail which hits businesses that derive no benefit from it whatever?

John Healey: If the hon. Gentleman reads the Bill, he will see that we are proposing the power for all the upper-tier, top-level authorities. He knows as well as anyone that in London the democratic and electoral arrangements are different from those in the rest of the country: the upper-tier, elected authority is the Greater London authority. If there is a problem with businesses in Coulsdon, or if businesses tell him that the power will not bring benefits to them, I suggest he take the issue up with the Mayor. I will come on to explain the significant safeguards in the Bill which will in all likelihood mean that as many as nine in 10 businesses would not be liable to pay a business rate supplement if it were introduced in their area.

Andrew Pelling: rose—

Mark Field: rose—

John Healey: I shall first give way to the hon. Member for Croydon, Central (Mr. Pelling), a compatriot of the hon. Member for Croydon, South (Richard Ottaway); then I will give way to the hon. Member for Cities of London and Westminster (Mr. Field).

Andrew Pelling: I want to support the hon. Member for Croydon, South (Richard Ottaway). Does the Minister not accept that it is a facet of London politics that a London authority inevitably means a transfer of resources away from rather poor suburbs such as Croydon to projects in the centre or east of London? Would the Minister be willing to follow the Select Committee's recommendation that boroughs should have some kind of veto so that they can address the issue of the continued transfer of money away from south London to other parts of London, which further taxation through the GLA will inevitably involve?

John Healey: The hon. Gentleman will find that the limitations to liability set out in the Bill will help to safeguard areas that are relatively poor in terms of high rateable value businesses.

Mark Field: rose—

John Healey: I now give way to the hon. Gentleman's former hon. Friend, who represents areas in which a more significant number of businesses will be above the threshold than in Croydon.

Mark Field: I will not be speaking on behalf of Croydon, which is well looked after—at least on this side of the House. The hon. Member for Croydon, Central (Mr. Pelling) may have had in mind my constituency as a part of the central London area that is to benefit.
	I wanted to ask about the Minister's earlier statement about the top tier. Does he not recognise that we have an entirely different system in London compared with other parts of the country, where that top tier would be a county council? The GLA's role is purely advisory and scrutinising in respect of the Mayor. It is therefore wrong for this power to be geared towards the GLA rather than the constituent 33 boroughs of London.

John Healey: I think the hon. Gentleman and I will have to disagree. Where we have local government that is not unitary, as in London and in some county areas, it is right that this applies to the upper-level authority, not least because it is much more likely to be leading the long-term strategic planning that will be part of preparing some of the big investment and infrastructure projects that are likely to underpin the performance of the local economy and the prosperity of local businesses for the future. Therein lies the argument for saying that the upper-level authority should have this power, although some have argued that we should allow districts in two-tier areas to have the same. In our view, however, there should be one business rate supplement for businesses in an area, without the risk that a county and a district might separately choose to take this power, which therefore will not be available to those lower-level authorities under the Bill.

Nick Raynsford: May I urge my right hon. Friend to take a robust view on this issue? The Conservatives appear to be advocating an approach that would make it impossible for Crossrail to be funded. If individual London boroughs opted out and power was taken away from the Mayor of London—who is a Conservative but is wholly supportive of the supplementary business rate in order to support Crossrail funding—that would be the death knell for Crossrail, which is crucial to the economic success of our city. I sincerely hope that the Government will remain robust on this.

John Healey: I welcome the support of my right hon. Friend, as a ministerial predecessor and as a London MP, because he understands the challenges of trying to put in place such a power and the challenges that then face local authorities, in consultation with local businesses, in deciding whether it may be appropriate for their area.
	As I have tried to explain, London is the leading example of this principle in the Bill and the leading example of the new power in the Bill. The new power will allow the Mayor of London to make good his commitment to funding a key part of the Crossrail package and to supporting economic recovery and the long-term growth of London. That is why he said last month:
	"Crossrail is vital to London and the UK, providing an enormous boost to the economy and, in the tough economic times ahead, creating thousands of jobs linked to its construction."
	That is why the GLA briefing for this debate declares that the business rate supplement
	"is a key part of the funding package for Crossrail... the successful passage of the BRS Bill is therefore crucial to the construction of Crossrail."
	Some argue that such investment opportunities should only be allowed to London; indeed, that is suggested in the Opposition's reasoned amendment. I have to say to their Front Benchers that I see that as the traditional and typical Tory view that nothing matters beyond the country's capital. They would deny other cities, significant county councils and other local authorities the power to develop with their local businesses new plans to support economies outside London. It is therefore right that we do not place a limit on the Bill so that only London may benefit from its provisions. Instead, we ensure in the Bill that all areas of England and Wales have the chance to use this power if and when it is right for them to do so. This legislation for long-term investment and the upturn should not be stalled by short-term concerns; nor should the interests of London be placed ahead of those of other parts of England and Wales.
	Some fear that businesses may be seen as a passive cash cow; that is also suggested in the Opposition's amendment. However, the Bill requires, on the contrary, that companies be active participants in debates and decisions on a business rate supplement and on the role that it may have in contributing to the future prosperity of their areas. Again, London is the leading example of that principle, and the GLA and the Mayor have consulted widely with business on Crossrail and its funding. That is why Sir Michael Snyder of the City of London Corporation said last month:
	"Crossrail is critical to the future of London's economy and it is essential that we continue to make major improvements to our transport infrastructure during these challenging times. Crossrail is absolutely crucial in keeping London and the UK globally competitive and for this reason we are delighted to support the funding of this vitally important new railway."
	Crossrail is supported by the wider business community in London, which, by doing so, accepts the funding package of which the business rate supplement is an essential element—an explicit part of the Crossrail deal.

Brian Binley: It was noticeable that the Minister claimed support from business, particularly in London, but pretty much all the bodies representing business have said that the rate is an extra tax, and another cash cow for local government. They are totally opposed to it. How does he equate that with the statement that he just made?

John Healey: In two ways. First, the picture that the hon. Gentleman paints does not represent the view of the many business organisations in London that accept the case for Crossrail, and which accept that a funding package needs to be put in place if we are credibly to pursue the ambition to build it. They accept the business rate supplement, which the GLA and the Mayor back, as part of that package. The hon. Gentleman talked about other business organisations, but the CBI is not opposed in principle to a business rate supplement, although it wants much stronger safeguards for business than we have in the Bill.
	The question is twofold: is there a case, in any given area, for the sort of economic development and investment that would not otherwise happen? If so, do the benefits to business, jobs and prosperity in the long term support the case for introducing a business rate supplement? That is essentially the framework of policy and powers that the Bill sets out.

Mark Prisk: The Minister cites the CBI. Will he give it what it asked for in its briefing to all Members: a ballot on every proposal?

John Healey: No, and I will explain why later. I note that that is an element of the Opposition's reasoned amendment.

Geoffrey Clifton-Brown: At a time when businesses are suffering the most for decades and bankruptcies are increasing, the Minister has said that he will not give businesses a vote in every case. Will he include a clause in the Bill saying that before any such scheme is considered, the economic conditions of businesses affected have to be taken into account? We are beginning to see empty sites up and down the high streets of this country, in prosperous places such as Putney. If such a scheme were proposed in Putney at this moment, a fragile trading condition could be made even more fragile.

John Healey: Whether or not there will be a vote on a business rate supplement, depending on the contribution required for any proposed project, there will be compulsory consultation, which will need to take into account the sort of things suggested by the hon. Gentleman.

Alan Whitehead: Has my right hon. Friend reflected, during his consideration leading to the introduction of the Bill, on the fact that the contribution to local government finance from the business rate has systematically declined as a proportion of the total amount of revenue coming in because of clauses in the original council tax legislation? Rises in the business rate are restricted to the rate of RPI inflation, so the contribution as a percentage of total income has declined over the years. Has he calculated what that effect has been, and what effect the business rate proposals may have on the total contribution by businesses to council tax revenue?

John Healey: I can give my hon. Friend the figures that he seeks. In 1997-98, business rates formed 25 per cent. of the money that was given to and spent by local government. Last year they formed 20 per cent. The reason is that we have been keen to restrict the annual increase in the small business non-domestic rate to the rate of inflation. At a time when significantly above-inflation Government grants have been given to local authorities, that proportion has therefore fallen. We do not propose to change that policy approach, and any business rate supplement levied in a local area or a combination of areas will be entirely in addition to the core commitment of the business rate take as a whole rising in line with inflation. That commitment will remain.
	The present economic circumstances underline the need for active government and an active public sector to protect the poorest, to correct flaws in the market and to exert the leverage needed to secure the proper role and contribution from our private sector. The alternative is to let the recession run its course and leave the upturn to the market—precisely the approach that was taken during the recessions in the 1990s and 1980s. We are determined not to repeat that approach.

Bob Neill: Against that background, how does the Minister justify the slashing of funding for the local authority business growth incentive scheme?

John Healey: The hon. Gentleman will know that that is a three-year scheme, and was only ever introduced as such. This is the final year, and so far we have paid out £833 million to local authorities as a reward for the business growth in their areas. That is entirely additional to the core Government grant, and entirely without strings attached to how local authorities spend it. Having trialled it by proxy as a grant, now is the time to build it in more systematically as a feature of the business rates system. That is what we propose to do from next year.
	The Bill is part of what is needed to put in place the foundations of an upturn. It is not easy, because in these difficult financial times there is a risk that major projects and policy reforms will be sidelined because of short-term concerns. There is also a risk that we will retreat to centralism, removing local discretion and flexibility when there are tough choices to be made. We will not do that, because we in the Labour party believe in greater devolution to local government. That is why the Bill is the latest in a series of powers and freedoms that the Government have given to local authorities in recent years. Those powers are essential at the moment, as authorities do more to deal with the downturn at local level and to face the new challenges ahead.

Daniel Rogerson: rose—

John Healey: I shall give way to the hon. Gentleman, and then— [Interruption.] Then perhaps I shall run through several of the powers and freedoms that we have devolved and placed in the hands of local government in recent years. There is obviously an appetite among Tory Front Benchers to hear about that.

Daniel Rogerson: The Minister is coming to one of the problems with the Bill, which is that it is neither confined to the funding of Crossrail, about which we have heard much already, nor a fundamental review of local accountability and how money is raised and spent locally. Such a review is much in demand and would enable far more involvement of local communities, whether through the localisation of business rates or through a review of how residential taxes are raised. The Bill is tacked on to Crossrail, which is unfortunate and means that it is neither one thing nor the other.

John Healey: I perceive it as an advantage that the Bill does not introduce a local income tax, and as a strength—not a weakness—that it is not confined to powers for London. It continues the series of greater powers and freedoms that we have given to local authorities in recent years, when we have introduced a general power of competence. It allows local authorities to do anything they choose, except raise taxes, to improve the economic, social and environmental well-being of their area.
	A moment ago, I mentioned the three-year business growth incentive scheme. So far, £833 million has been paid to local authorities to reward their efforts to encourage business growth in their areas. Under the local enterprise growth incentive scheme, 20 local authority areas receive £280 million to boost enterprise, inward investment and work. The new power to introduce a community infrastructure levy in the recent Planning Bill gives councils the ability to raise money for vital infrastructure to support more sustainable growth and development.
	Local area agreements are struck between the top-level councils in the country and national Government, and designed so that councils can set the priorities for their areas. In all but one of the 150 local area agreements, those councils have set at least one economic priority and target in their plan for the future. In business improvement districts, local businesses join forces with local councils and also invest in their own future.
	The murmurings from Tory Front Benchers might suggest otherwise, but I think that members of all parties recognise that local authorities can have an important influence on the economic prosperity and development of their areas. Councils throughout the country, with leaders from all parties, support that view. Sir Michael Lyons emphasised that point in his inquiry into local government. It was a central principle of the sub-national review, which I outlined to the House in summer 2007, and it is also contained in the Local Democracy, Economic Development and Construction Bill, which is starting its passage in the other place.
	Local government, across the parties, has welcomed the new powers and funding that we have offered to support economic development work.

Lee Scott: Does the Minister agree that, in the business improvement districts to which he referred, businesses have engaged with local councils and voted in favour of extra revenue going towards improving their areas, and that that is true democracy?

John Healey: I recognise the success of business improvement districts—67 are up and running. They are in diverse areas, such as Liverpool, Leicester, Worthing, Croydon—

Lee Scott: Ilford, North.

John Healey: Indeed. The 67 areas are diverse and led by different political parties, but work with their local businesses, normally in a very localised area, often to improve safety and environmental quality, and partly to boost business prospects. In many ways, the House and the hon. Gentleman might perceive the business rate supplement as building on that success—applying the approach of the business improvement districts to larger areas and potentially raising money to make lasting change through big projects, such as Crossrail in London.

Mark Field: Will the Minister give way?

John Healey: I did not anticipate giving way at that point, but I will because I shall move on to something else afterwards.

Mark Field: Does the Minister not recognise that, whereas with business improvement districts the issue is consent and parties working together, Conservative Members' worry about the Bill is the amount of compulsion, which is at odds with the development of business improvement districts? I agree that they have generally—and certainly in my constituency—proved a great success.

John Healey: As I said, businesses will be consulted in all cases, and there will be a legal requirement on councils to do that. I shall deal shortly with what I regard as the principled case in the Bill that, if the business rate supplement is to support a specific proportion of the funding for a proposed project, there should be a vote, and that in other circumstances there should not.

Roger Gale: The Minister is aware of the concern about the effect of the Government's levy of 100 per cent. empty property rates, which was designed for a completely different economic climate. My understanding of clause 11 is that the business rate supplement would apply to any property on which rates have to be paid in full. Is the Minister seriously telling us that a business that already has to pay 100 per cent. rates on an empty property will also have to pay the business rate supplement, even though the property is empty?

John Healey: The Bill allows local authorities, in proposing and implementing a business rate supplement, to make provision to exempt, if they choose, business rate payers on empty property. The hon. Gentleman will also be aware that in the pre-Budget report the Chancellor said that, given the current economic circumstances, the rateable value threshold on empty property will be raised from £2,000 to £15,000 for next year, thus removing the liability to pay business rates on approximately seven out of 10 empty properties.
	However, the essential economic case for saying that there should be a liability for business rates on empty property remains, and it is this. It is likely to increase the incentive to re-let, reuse or sell empty business properties, and is therefore also likely to reduce the rents that other businesses pay for the use of their premises. That remains the central economic case for empty properties not being relieved from business rates in the long term, in the way that they have been in the past.
	The Opposition, in their motion and their interventions this afternoon, have been saying that they do not like the Bill or aspects of how far it goes. However, we have been urged to go further on business rate supplements than the provisions contained in the Bill. The all-party Select Committee on Communities and Local Government urged us to have no cap on the levy determined by local authorities, to leave ballots to local authorities' discretion entirely and to allow lower-tier as well as upper-tier authorities to set their own business rate supplement. The all-party Local Government Association has also urged us to raise the limit on the business rate supplement to 4p and to allow local authorities a free hand to decide, in the light of local needs, whatever they should spend the gained revenue on.
	However, we have concerns about the financial implications for business. That is why we have struck the balance contained in the Bill, in preparing the policy and the provisions, and why a series of safeguards for business is set out in the Bill, involving statutory consultation in all cases. There will be an upper limit on the business rate supplement of 2p, a double lock ballot where the BRS will fund more than a third of the total cost of a project, and a rateable value threshold of £50,000, under which no business will be liable to pay a business rate supplement.
	We have also carefully considered the extent to which business should be able to influence the projects that are funded by business rate supplements. The involvement of business in decisions about projects will reflect its financial contribution. Businesses will be consulted in all cases; indeed, there is a legal obligation on councils to do so. It is right that business should have a vote when firms are picking up a larger share of the cost. Where businesses are providing more than a third of the money for a project, they will have a vote on the future of that project. However, where businesses contribute less, they will be consulted in the same way as others, including communities affected by that project. That is because it is not right for business to be able to block projects when it is contributing a small minority share of the funding.

Bob Neill: On what basis was the figure of one third arrived at and what consultation took place, either with business or elsewhere, in determining that figure, as opposed to a quarter, a fifth or a half?

John Healey: There has been considerable debate on and analysis of this policy area for some time, not least in the contributions and evidence to Sir Michael Lyons's inquiry. As I have tried to explain, we have judged that the right balance between the competing interests is that one third of the cost of any large project is the appropriate point to trigger a vote of businesses that may be liable to pay the supplement. However, we will no doubt scrutinise that in more detail as the Bill I hope proceeds through the House.

Geoffrey Clifton-Brown: In order to give businesses a flavour of what is in the Government's mind for this Bill, will the Minister tell us how many such schemes there are likely to be in any one year? Is it likely that the Bill will operate only in wholly exceptional circumstances such as Crossrail, or are we likely to find that, as local authorities become increasingly squeezed financially, they will use this mechanism to raise revenue from businesses?

John Healey: The short answer to the hon. Gentleman's question is that the extent to which business rate supplements are introduced will depend on the decisions and discussions—and, in some cases, the votes—of businesses in local authority areas. The Bill clearly sets out that any project funded by a business rate supplement must be additional to the authority's current spending plans, and that it would not have happened if the supplement had not been in place. We will support and strengthen this with guidance, on which we will consult, but the Bill also makes it clear that the funds raised by the business rate supplement may not be diverted to plug spending gaps in local authority budgets. In other words, any revenues raised from the business rate supplement must be additional and cannot be spent on the kind of services for which a local authority has other statutory responsibilities.
	In addition, there is the safeguard that the funds raised by the business rate supplement must support projects designed to improve the economic development of an area. These might include infrastructure projects, the promotion of an area or perhaps a strong skills programme. I also want to make it clear what the money cannot be spent on, as I tried to do a moment ago. It has to be additional, and it cannot be spent on mainstream services such as housing, health, social care or education, which a local authority has an existing obligation to provide. I intend to set this out in more detail, in guidance or regulations, to make it clear. I also plan to introduce drafts of the guidance or regulations for formal consultation alongside scrutiny of the Bill during the Committee proceedings in this House.

Mark Field: Does the Minister not recognise that the issue of additionality fills us with a certain amount of gloom? After all, it is less than a decade and a half since the national lottery was introduced, with much the same idea of additionality in mind. Is there not a concern that, after a decade or so, this legislation might be used to provide local authorities with an income where certain grey areas exist, and that such an income could be utilised as a broad, general rate rather than one specifically earmarked for economic development in the way that the Minister envisages?

John Healey: I understand the hon. Gentleman's concern. He and I were elected to the House together in 1997; neither of us was here when the national lottery legislation was passed. I hope he will consider the detail of this Bill, and that he will appreciate that the framework of the provisions requiring funds raised through a business rate supplement to be additional will be a sufficient safeguard. I hope that he will be able to continue these debates as a member of the scrutiny Committee, when we could look at these matters further.

Bob Spink: Will the Minister give me some clarification? If an infrastructure project, for example, were to be especially beneficial for one or two boroughs within a county council area, would that county council have to levy the rate increase on all the boroughs in the county, or could it levy the increase only on the specific boroughs for which the project was going to be particularly beneficial?

John Healey: At the moment, our view would be that we would like it to be possible for a county council to levy a business rate supplement in those parts of the county where there was support for doing so from the district councils in the circumstances that the hon. Gentleman has suggested. Ultimately, however, that would be a matter for the upper-tier authority, in dealing with the business community in its area, either through consultation and discussion alone, or through consultation, discussion and a ballot.
	In conclusion, the Bill provides an important new power for our long-term prosperity. It will enable the Mayor of London to raise the money he needs to meet his commitments to Crossrail here in London, and it will extend that power to all upper-level authorities in England and Wales so that they, too, can fund projects that will create wealth and jobs in all our communities in the future. I commend the Bill to the House.

Bob Neill: I beg to move an amendment, to leave out from "That" to the end of the Question and add:
	"this House declines to give a Second Reading to the Business Rate Supplements Bill because supplementary rates threaten to become another local stealth tax at a time of economic downturn; because local firms should have a vote on any supplementary rate, as already occurs with Business Improvement Districts; because cuts to the Local Authority Business Growth Incentive Scheme will put pressure on councils to levy the supplementary rate; because the proposed exemption threshold for small business will be far less generous following the 2010 revaluation; because the Bill does not address the problems that local firms are suffering as a result of the Government's business rate rises on empty property and retrospective increases in rates levied on business in the registered ports; and because the Bill fails to limit the application of supplementary business rates to the Greater London Authority and the Crossrail project."
	In moving the amendment in the name of my right hon. Friend the Member for Witney (Mr. Cameron) and others, I congratulate the Minister on the one thing that is always held in his favour: he is a man capable of being very reasonable. In this Government, the ability to say outrageous things reasonably is, of course, a valuable commodity, so I quite understand the right hon. Gentleman's valued presence on the Government Front Bench. If he will forgive me for saying so, when it comes to outrageous statements of 2009 so far, the idea that the Bill deals not with a tax but only with a power to levy a tax is a pretty good kick-off. Here is a new conundrum with which children can be entertained over the Christmas period: "When is a tax not a tax? When it is a power to have a tax." Dry old lawyers such as me used to have a saying—"agreement for a lease is as good as a lease" and there was good sense in that, because that was the reality. A power to levy a tax is, in practice, a tax—and that is the reality. With every respect to the Minister's competent performance in defending the indefensible, let us at least be honest about what is happening.
	I understand, of course, the reasons behind the desire to examine how local government finance is approached. There is the whole background of the Lyons report and there is a sense in which we should genuinely seek to give local authorities an incentive to encourage economic development in their areas. Two points arise, however. If the Minister will forgive me, it might be thought that that does not happen at the moment, but in fact it does. Local authorities—Essex was mentioned earlier and there are many other examples—are already busy using a raft of powers and are encouraging economic development by means of brokerage, encouragement, effective use of planning powers and so forth, but there is no need to provide for tax-raising powers to go along with them.
	Secondly, the Lyons review spoke of flexibility in raising business rates in a number of ways. Not for the first time in relation to Lyons, the Government have rather cherry-picked what best suits their own purposes. We may remember that at the beginning of this argument, suggestions were made of flexibility either way. The Government—let there be no mistake that this is a Treasury-driven measure—have chosen a form of flexibility that goes only in one direction: the ability to raise a tax, but not to reduce the business rate, as was mooted at one point. They are making selective use of the arguments. Furthermore, the Government have ignored the point made throughout the Lyons report and, indeed, in the subsequent White Paper—that it was necessary for business to have a real say in any such proposals.
	If the Minister will forgive me for referring to another interesting phrase of the year so far, "compulsory consultation" is not the same as having a right to vote. If anyone thinks that compulsory consultation can prevent people's rights from being ignored, they should think about the previous Mayor of London and the introduction of the western extension to the congestion charge, where a compulsory consultation was required by Act of Parliament. The Mayor carried it out; the majority said that they did not want it, yet the Mayor ignored them. That shows the value of such "compulsory consultation". Whatever the intentions, rather than encouraging closer partnership between local authorities and business, which happens in the best run authorities, there is a real danger of driving a wedge between local authorities and business, which will be sad and damaging in the long term.

John Healey: Will the hon. Gentleman tell me whether the present Mayor of London believes that there should be a vote in all circumstances?

Bob Neill: I was about to come on to Crossrail, and if you will forgive me, Mr. Deputy Speaker, I will pick up on that point. Interestingly, the briefing document that the Mayor of London made available to all Members of this House states specifically that he supports the use of the business rate supplement only for the Crossrail project, so using London as an example for rolling out the business rate supplement across the country misses the point.
	Let me move on and deal with Crossrail—

Nick Raynsford: Will the hon. Gentleman give way?

Bob Neill: I will, because I was coming on to Crossrail anyway.

Nick Raynsford: The hon. Gentleman will know that Crossrail is a project of such size, significance and length, in terms of the construction period, that it would be completely unrealistic for the Mayor of London to think of any other possible use for the business rate supplement in the next decade.

Bob Neill: The right hon. Gentleman is right to an extent: Crossrail is a unique project because of its size and extent. I will come back to that point because, in fact, it is an argument against the Government's approach to the Bill. Secondly, it rather flies in the face of the Government's own position that they take Crossrail and use it as an example to roll out nationally. The right hon. Gentleman is correct: Crossrail is a one-off. It is of exceptional size and economic importance, and its funding mechanisms have been the subject of exceptional complexity and negotiation for a very long time.
	Let me make it clear that if this Bill were limited in its extent purely to putting in place what is required to carry out the funding agreement for Crossrail, we Conservatives would support it, not oppose it. There has been a long-term debate about Crossrail, going back probably almost to the days before the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) and I were even in the House—certainly to when he first arrived here. It has been around for a long time, and there has been massive consideration. Business in London has been very closely involved, and it is significant that all the representative business groups in London, organisations such as the CBI and the chambers of commerce, support the supplement—for Crossrail, which is the important caveat. Their national representative organisations criticise the Bill for using the Crossrail project as an excuse to introduce a stealth tax on businesses across the rest of the country. That is the key point that is being missed.
	The other point, so far as London and Crossrail are concerned, is that there has been a long-standing political consensus in favour of Crossrail in London. All the major candidates at the mayoral election last year stood on a platform of supporting Crossrail and the funding package, so a democratic legitimacy exists that is not allowed for and presented in the Bill before us. It needs to be made abundantly clear that Crossrail is therefore not a justification for the Bill in its current form. It is, I am sorry to say, a classic example of the Treasury's approach—as I said, this measure is essentially Treasury driven, as was the sub-national review—a form of fiscal mission creep to find means of gathering in more public money.
	A second point made in favour of the Bill is that it is additional funding.

Richard Ottaway: I was waiting until my hon. Friend had finished on Crossrail before asking him a question, and I think he is now moving on. The Opposition amendment declines to give the Bill a Second Reading because it
	"fails to limit the application of supplementary business rates to the Greater London Authority and the Crossrail project."
	What limitations would my hon. Friend like to have seen, had we been in government at the time?

Bob Neill: As we have set out, we would agree with the Mayor that if a Bill was presented that simply gave effect to the funding package that was agreed some time ago, and which has been in place for some time, we would see the logic of that and give a fair wind to it. However, the problem is that the Bill goes well beyond that. The package was the subject of considerable public debate during the mayoral election, so there was an opportunity for Londoners to express a clear view on it. That does not apply to these other matters. We do not want to delay Crossrail—I understand that some of the Bill's provisions make quick progress possible—but we do not want it to be used as a Trojan horse to expand the burden on businesses elsewhere. That is the error that is being made.

Robert Wilson: Although we have been talking about Crossrail very much in terms of London, it will go out as far as Maidenhead in the west and we hope that, ultimately, it will come to Reading. Will my constituents have to pay the supplementary business rate for Crossrail to come to Reading? Will the same apply in respect of Maidenhead?

Bob Neill: I understand my hon. Friend's point, but, with respect, may I say that I suspect it would be more appropriate to address the question to the Minister than to me? Currently, the provisions simply give power to upper-tier authorities and do not specify which. I should point out to my hon. Friend that the Bill contains a clause that would enable upper-tier authorities to levy a business rate supplement jointly, but he would have to ask the Minister about that. Perhaps we will be able to return to that point when we examine the details of the relevant clause, where safeguards are not properly addressed.
	Another point advanced in favour of the Bill is that it provides additional money, and my intervention hinted at the issue that I take with the Minister about that. If the Government are serious about making additional money available for economic development by local authorities, it is extraordinary that they almost strangled the local authority business growth incentives—LABGI—scheme at birth by cutting its funding so drastically. The LABGI scheme was not perfect, but it edged in the direction of giving a greater incentive to local authorities to attract business to their areas. The funding was cut from £1 billion over the first three years to £150 million in the following three. In effect, the Treasury—yet again the villain of the piece—is taking moneys from local economic development and by sleight of hand, in the form of this Bill, shifting the burden for economic development on to businesses and their customers and employees.
	The Treasury has used that trick repeatedly under this Administration. May I give one other London-based example in that regard? Interestingly, when the opportunity for the Mayor of London to levy a congestion charge was first introduced under the Greater London Authority Act 1999 an assessment was made of the likely take of the congestion charge—it did not turn out to be terribly accurate, but that was consistent with most of the other things in the assessments at that time. Lo and behold, the following year the central Government grant to Transport for London was reduced by an amount that was almost exactly the same as the projected take of the congestion charge revenue. The truth is that the Government have form for this, and they are robbing shopkeeper, businessman Peter to pay the Treasury's Paul.
	I hope hon. Members forgive my saying so, but there is no credibility to the suggestion that this measure will attract additional money. The points outlined by a number of my hon. Friends in interventions were well made. I can understand why local authorities have been interested in the ability to use such a power—I do not blame them—but one of the reasons they are interested is precisely that they are being put under enormous pressure by central Government. Local authorities have had a range of unfunded obligations placed on them in recent years, they have been given a range of ungenerous, rather tight financial settlements and they have seen the LABGI scheme funding slashed—no wonder they are under pressure to seize any opportunity that they can. In a sense, the Minister is setting up local authorities to be his human shield against criticism—he is pushing them into the front line and saying they want this, when it is almost being done with a financial gun to their heads. That is the reality, and the suggestion being made does not have much credibility.
	A third point is that the suggestion has been made that the Bill will give local businesses a stake and a real say. Here is a separate point that the Bill simply fails to address in terms of its own original prospectus. I was having a look at some of the phrases used in the White Paper. Benefits were suggested as including devolved decision making, because resources would be raised and controlled locally and those who have a stake in the success of a scheme and the best understanding of what is needed would be running it. That will not be the case, because the people who have the best understanding and the most at stake are the local businesses and they are not going to have a ballot on this in all cases. Neither is there any provision in the Bill to give those local businesses that contribute an ongoing overview of the implementation and working through of the scheme. In fact, their say is limited, because the compulsory consultation can be ignored. That issue could be addressed—every business group that made representations suggested this—by requiring a ballot in all cases. I hope that the Minister will reflect on that, because if there is to be genuine partnership, there must be good will on the part of local authorities, and that can be achieved.
	The Minister rightly said, as did my hon. Friend the Member for Cities of London and Westminster (Mr. Field) and others in interventions, that business improvement districts are a good model for that. I have had the opportunity to talk to several people who run successful business improvement schemes. I recently met Dame Judith Mayhew Jonas, who is leading a successful scheme in a new west end company in my hon. Friend's constituency. The point that was made by everyone involved in the BID schemes is that they work because there is genuine buy-in from businesses and a real incentive for everyone to succeed. Why not adopt that model with the compulsory ballots?

Nick Raynsford: The hon. Gentleman knows that I have a particular interest in the Bill's business improvement district scheme because I introduced it when I was a Minister. I suggest that not all businesses have a say in a ballot because not all businesses pay the business improvement district levy. It is a levy only on tenants, and there is an issue about the non-contribution of freeholders, who are not involved in the balloting, although many make voluntary contributions because they see the benefits of the scheme. Will the hon. Gentleman be more careful in his claim that all businesses contribute through a ballot, because that is not so?

Bob Neill: Voluntary contributions are welcome, but it follows from the right hon. Gentleman's logic that those who pay should take part in a ballot so that they are represented; otherwise, it would be taxation without representation. That does not detract from the valuable role that voluntary contributions play in BIDs, nor does it undermine the argument that those who are liable to pay the BRS should have a ballot before the scheme is introduced. The point is simple, and would improve the Bill's credibility hugely. It is difficult to understand why the Government have not given way on that, and I hope that they will reflect on it if the Bill progresses to Committee.
	I want to raise some issues about safeguards. First, the most important safeguard, which all businesses say that they want, is the compulsory ballot, and I have discussed that. The second issue is the threshold. The Bill does not specify what it will be. The Minister said that the intention—I do not doubt it—is that it should be £50,000 rateable value, but we must make allowance for the fact that there will be a revaluation of business rates in 2010, so many more businesses are likely to be above the threshold. The suggestion that nine in 10 businesses will not pay is unlikely to be the case. Surely, the Government should give a commitment—perhaps they could put it in the Bill—to review the threshold after each revaluation. It seems only fair and reasonable to provide businesses with that further protection.
	There is concern about the definitions in the Bill. I appreciate that it contains some definitions of what the BRS cannot be spent on, but it is interesting that that is the opposite approach to that adopted for the community infrastructure levy in the Planning Act 2008, which contains a specific definition of what can be the aim of a CIL. Why have the Government adopted virtually the opposite approach in the Bill? A tighter and specific definition of economic development would help businesses.
	Some people are worried about the administrative costs of a two-tier structure, and several London boroughs have asked for an assurance that their administrative costs will be met within the costs of the BRS. I hope that the Minister will respond to that.
	Those are a number of specific and quite technical points that we might return to in Committee, but they do not take away from the overall thrust of our argument, which is that in a sense this is a form of taxation without representation. I may have spent some of Christmas watching "John Adams" on Channel 4—a very fine series it was too—but I do not want to see the Minister cast as a sort of General Gage, imposing these imposts on business. He does not look at all like Lord North. However, there is a real risk that the relationship that has been built up in good authorities will be damaged. The provision is a burden on businesses at a time when only today we have seen the Prime Minister on television announcing yet another set of supposed initiatives to try to help in an economic downturn. However, it is not the words that count but the deeds. At the same time as we have the spin about more investment in jobs, the Government, as their first legislative act, are introducing a Bill that will impose a burden on businesses and therefore be a threat to jobs.

Geoffrey Clifton-Brown: My hon. Friend will have noticed that the thrust of the Minister's argument for not having a ballot under the regulations is that he is worried that businesses would block the proposal. Surely businesses know what is best for them, and if they block such a proposal they obviously cannot see a benefit to it. If they cannot see a benefit, surely the proposal ought to be carried out under general taxation.

Bob Neill: My hon. Friend is absolutely right, and the point is well brought out by the experience of the business improvement districts. When there is a good BID proposal and businesses see the merit of it, the proposal is carried through in the ballot and businesses vote for it. The test is as simple as that. My hon. Friend makes a very solid point.
	I hope that we have set out a number of our concerns about where the Bill fails to address the objectives of the initial debate. I also wanted briefly to touch on the other matters referred to in the amendment, which include the missed opportunities in the Bill. Not only do we have to consider the proposals with the BRS, but we have to consider them alongside the accumulation of other burdens on businesses. We have the BRS on top of the community infrastructure levy. In some areas, we have the possibility of congestion charging and now we have the revival of the cost potential of a workplace parking levy. I hope that at some point the Government will give us some overall assessment of the economic impact of all those potential burdens on business. Will the Government also look again at whether BIDs' contributions should be automatically offset to avoid a form of double taxation?
	I want to address two other issues to which we have referred where action has not been taken. The first relates to the situation with empty properties. I know that my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) will deal with the point later, but there is a real concern about the way in which the Government's proposals have worked through in relation to empty property relief. It cannot be satisfactory to have a set of disincentives that cause people to take the roofs off buildings and to demolish industrial plants simply to avoid the levy. We cannot blame the businesses because, with respect to the Minister, there was a lack of economic reality in the advice he was given when he said that the move would be an incentive for people not to leave business premises empty for so long. No landlord wants to leave their premises empty. In the current economic climate, premises are empty because there are not the customers. Clobbering people with the loss of relief is hardly helpful to business confidence at a time when it is falling.

Brian Binley: Does my hon. Friend recognise that in certain parts of the country ground rents are being advertised at £1 per square foot simply so that the rates will be paid by the new tenant and not by the owner of the empty property?

Bob Neill: That point very well demonstrates the pressures businesses are under and why the addition of even 2p in the pound on the business rate in its current form—about 4.3 per cent. on the current 46.2p business multiplier—would be an enormous burden on businesses, just as we hope they will be starting to come out of recession, if we reach that stage by 2010. My hon. Friend's point is well made.
	The final area of rating injustice that the Bill does not tackle is the rates situation for businesses in registered ports. The issue has been raised a number of times in the House by Members on both sides. I know the Minister is well aware of it because he and I have had some dealings about it in the past. The Bill would have been an opportunity to address what is happening to businesses in the ports, where there is the reality of a £33 million tax hike on their liability. Because the Valuation Office retrospectively increased the levy and changed the basis for calculation from the old cumulo system to a new one, port businesses are faced with backdated rate demands that in some cases exceed their turnover. So far this year, two businesses in the ports have gone bust specifically because of their inability to meet the backdated rates demand. That means 50 or 60 jobs. Many such firms are small, but when we add things up we find that the situation is serious.
	A number of ports businesses lobbied Members on both sides of the House just before the Christmas break. Operators of major firms, such as DFDS Tor Line, said that if the situation continued, such would be the difference to them that they would have to consider whether their investment should be in the UK or in Rotterdam on the other side of the North sea.

John Healey: rose—

Bob Neill: I give way to the Minister—perhaps he has some good news for us.

John Healey: I am grateful to the hon. Gentleman for his generosity in giving way. Does he not recognise that I and the Government are also concerned about the scale of the backdated liabilities? We announced in the pre-Budget report that we would allow backdated liabilities from previous years to be spread over a full eight years, so that backdated tax liabilities that are due from those businesses can be made more manageable and less likely to tip companies over the edge, particularly at this difficult time.

Bob Neill: I appreciate the Minister's expressions of concern and I do not doubt that they are genuine, but perhaps we need to go back to the almost total lack of business experience among his departmental advisers. The reality is that simply spreading the payment does not remove the liability. The problem facing businesses is that under the accounting rules they have to bring the whole of their liability into the current year's account and put it on the balance sheet, so, with the rates due by 31 January, that could push many of them into a position where they were trading insolvently. That is the bit that the Government do not seem to grasp. However well intentioned the proposal for spreading the payment may be, it does not get businesses around the legal problem that pushes them into insolvency—as it has done in two cases. If the Minister could come up with a solution to that problem, I should be the first to applaud him and welcome it, but so far the Government's measures—whatever their intention—have not addressed that crucial issue. That is why there is a real threat to businesses in the ports. The Bill has missed yet another opportunity.
	The late Iain Macleod, an international-standard bridge player, once observed that politics was rather like bridge: timing is everything. In the current economic climate the timing of the Bill would certainly not bring the Government to international standards; their timing would relegate them not from the bridge club but from the under-fives tiddlywinks league. I honestly hope that the Government will reflect on a Bill that is likely to do considerably more harm than good and will undermine many of the objectives shared by Members on both sides of the House in this time of economic difficulties.

Nick Raynsford: I start by drawing attention to my declaration in the Register of Members' Interests. I strongly support the introduction of the Bill, and I disagree profoundly with the view expressed by the hon. Member for Bromley and Chislehurst (Robert Neill) at the end of his speech that the Bill will bring "more harm than good". He, as a London Member, will rue that remark, because the Bill is crucial to the future economic success of London. If ever there was a time when we needed investment in important infrastructure that will bring long-term benefits, this is it.

Bob Neill: The right hon. Gentleman, as a fair man, would not want to misquote anyone; he knows full well that I made it abundantly clear at the beginning of my speech that we support Crossrail and the use of the business rate supplements to fund the Crossrail package. However, it is perfectly reasonable to observe, in the context of the rest of the Bill, that damage will be done. I am sure that he will know that the suggestion that I was undermining Crossrail is not an accurate reflection of my words.

Nick Raynsford: I have to say to the hon. Gentleman that the whole tenor of his speech was one of carping, criticism and attacks. I quoted his words at the end of his speech, which he made very clear; he indicated that the Bill would bring "more harm than good". Those were his words; he felt that it would bring fewer benefits than disbenefits. If he takes that view, he is condemning Crossrail, given that Crossrail is far and away the largest scheme that is likely to benefit from the Bill. He is trying to say, "Well, the measures are okay for Crossrail, but not for anything else," but that stance is intellectually unjustified and incoherent, as I will demonstrate later. It is an attempt to cast a veil of respectability over the disreputable argument that the Bill is not beneficial.
	The Bill is important because it helps to build partnerships between business, local government and other stakeholders for the funding of necessary infrastructure. People may ask why that is necessary, when there is already a business improvement district scheme. A brief reference was made to BIDs at an earlier stage in the debate. As I made clear, I believe strongly that the BID scheme is an important initiative that helps local investment in improving areas.
	If we look at the BIDs created to date, the pattern is that they are essentially local. The focus on improvement is very much to do with relatively small-scale local enhancements, such as improving the cleanliness, safety and attractiveness of shopping areas, making it easier for people to access those areas and to benefit from shopping there. Those are the main characteristics of most of the BIDs put in place to date. Of course, we are talking about major infrastructure investment on a much larger scale. The benefits will be felt over a much wider area than the relatively small town centres that have tended to adopt BIDs.
	I am a strong supporter of BIDs, but the BID mechanism alone is not sufficient. Crossrail is a classic illustration of why the Bill is necessary, and why there needs to be a larger, more extensive and ultimately more robust framework for funding important infrastructure, in cases where business stands to benefit substantially from that investment.

Geoffrey Clifton-Brown: The right hon. Gentleman earlier boasted that he was the Minister who introduced BIDs. He and I spent many hours in Committee on what form the ballot should take. Given that he was so keen on ballots for the BID system, and given that he has just said that we are now talking about a system on a much larger scale, will he vote against the system until the Government undertake to introduce provision for a full ballot to be held on each and every occasion on which the measures are used?

Nick Raynsford: No, I will not, for precisely the reason that the hon. Gentleman mentions: we are talking about a proposal that is far more wide-ranging than the BIDs, which have a narrow, local focus. As he will have heard in my exchange with the hon. Member for Bromley and Chislehurst, the Front-Bench spokesman, not every business has a vote on BIDs. The landowners do not have a vote. Many people saw that as a potential weakness in the BID mechanism, but we regarded it as necessary, because it would have been a huge complication to create an electoral register for freeholders and landowners that is separate from that for tenants, who are liable to pay the business rate. To avoid unnecessary bureaucracy and complication, we did not extend a voting right to freeholders. So in the case of BIDs, not every business has a vote.
	We should think about the purpose of the initiative. If it is meant to secure the support of business for major infrastructure schemes, it is vital, first, that there is a framework to ensure that support and, secondly, that it cannot be prevented from operating by the activities of businesses that do not see the benefits. We have heard the view of the hon. Member for Croydon, South (Richard Ottaway), who is no longer in the Chamber; he did not see what benefits small businesses in Croydon would gain from Crossrail. He is wrong, because businesses in Croydon will benefit substantially from Crossrail, which has conducted a detailed survey of the economic benefits resulting from improved journey times and greater access to commercial premises and of all sorts of other benefits from improved transport. It demonstrated significant economic benefits in all parts of London—including areas such as Croydon, which would be some distance from the nearest Crossrail station—as London's transport network is an integrated whole. When part of that network does not function, the consequences spread across the whole city. There are benefits, even in Croydon, and as my right hon. Friend the Minister made clear, small businesses will be exempt. The supplements will apply only to businesses above the threshold, which we think will be set at the rateable value of £50,000, although that has not yet been confirmed in the Bill.
	The risk of a universal ballot by businesses outside the area immediately affected by the infrastructure investment, which could destroy the huge benefits for those businesses that are more familiar with the scheme in the area where it will be constructed, could prevent necessary improvements. However, I stress that there are safeguards. First, schemes where less than a third of its cost is met by business will not be subject to a ballot. In any case in which business is expected to meet the majority or a significant proportion of the cost, if the cost is less than 50 per cent. but more than a third, businesses will have a ballot, which is a fair safeguard. Secondly, as we know from the Crossrail experience, the measure would not command the support of business if business in London did not believe that it was a good thing. Even without holding a vote, business representatives in London—the CBI, London First and the chamber of commerce—all know how crucial Crossrail is to the future of our city. That is why there is extensive business support for the concept of a business supplement.
	This is important because, as Opposition Members know only too well, Crossrail has been a long time a-coming. The scheme—the hon. Member for Bromley and Chislehurst made this point—has been in gestation for 20 years or more. I remind the hon. Gentleman that when his party was in government, the scheme fell. His party introduced a Bill in the early 1990s to create a Crossrail scheme, but it did not get through the House, not because of the activities of Labour Members but primarily as a result of the stance of the Conservative Chairman of the Select Committee that looked at the scheme. Perhaps that is a comment on part of the Opposition's past to which they do not want to return or of which they do not want to be reminded, but that was the shambles of the hon. Gentleman's Government in the 1990s, and that was the reason why the Crossrail scheme did not proceed.
	Without a sound, broad funding base, which is now in place, I do not think that Crossrail would proceed even now. It is difficult to see where the funding would come from to enable it to happen if it were a wholly publicly funded scheme without an element of business contribution. It is fundamental if we are to enable a scheme such as Crossrail to proceed that we have the option for that type of joint partnership funding for major infrastructure schemes. Under the Crossrail formula, funding will come partly from central Government, and it is right that they should contribute; partly from the Greater London authority, and it is right that there should be a GLA contribution; partly from the users of the service through the fare box, which has been taken into account in the financial formula; and, crucially, from business.
	The business contributions are not uniform. There are two separate types of business contribution. There is the direct contribution of those businesses that have premises or development sites in the immediate locality of a new Crossrail station, which stand to benefit enormously from the creation of the new transport links. I think of Berkeley Homes in my constituency which is carrying out an important new development on the Royal Arsenal in Woolwich—a major regeneration project that is rightly attracting a great deal of support, plaudits and awards, because it has transformed a formerly derelict site into an area with real prospects in the next two decades of becoming one of the great locations not just for residential premises but for businesses.
	Businesses recognise the huge benefits that will come to them from having a Crossrail station in Woolwich and they are contributing towards the cost of that station. That is a direct contribution. There are similar contributions at Canary Wharf from the City of London and elsewhere. That direct contribution is an element, but other businesses not so closely connected to the areas where there will be stations will benefit for the reasons that I referred to in the study that Crossrail carried out into the wider economic benefits. It is right that above the threshold—a £50,000 rateable value threshold seems a reasonable one—there should be a contribution from business towards something that will unquestionably improve the economy of London and the prospects for London businesses. That is the nub of the argument in favour of the type of mechanism that the Bill represents.
	I heard the hon. Member for Bromley and Chislehurst saying, "Well, yes, we understand that Crossrail is quite a good idea." He is bound to say that, because his own Mayor of London, Mayor Johnson, is a very strong advocate and rightly so. The hon. Gentleman would be in an impossible position if he were cutting Boris off at the legs by saying, "No, we don't support this." He has had to get himself into the curious position of saying, "We don't really like the Bill"—the tone of the contributions that we have heard today from the Opposition has been hostile—"but okay, we accept it for Crossrail."
	That is intellectually incoherent. Why should London benefit from the Bill and no other part of the country have the benefit? If in any other part of Britain a major infrastructure scheme is developed that has the support of the business community because it believes that the scheme is crucial to economic success, why should it not have the option? We heard no answer to that question. To say that the Bill is acceptable in London on a major project such as Crossrail but nowhere else is incoherent and non-credible.
	This new business rate supplement scheme is fundamental to the economic well-being of our country and there could be no better time than the present for it to be introduced. To argue that this is an inappropriate time is extraordinary. In the next week or so we will see the inauguration of a new President of the United States, which many in all parts of the House welcome. He will be clearly committed to major action, including major infrastructure investment to tackle the current economic difficulties that that country, along with the rest of the world, is facing. We know perfectly well from history what an important role major infrastructure investment played in the 1930s in attacking the problems of the great depression.
	It seems an extraordinary position at this point in time to try to prevent a scheme from being put in place that will benefit the economy, that can command the support of local business and that is subject to loads of safeguards against measures being imposed on business. That reinforces the view that the Conservative party does not know what to do and so is doing nothing, as against a Government who are determined to take the action necessary to tackle and respond to the challenges of our time. If the Opposition continue in their incoherent, intellectually bankrupt position of saying, "Yes, the Bill is all right for Crossrail, but nowhere else in the country, and we don't like it," they will be seen as the party doing nothing at a time when the country deserves better. I sincerely hope that the Bill receives a solid Second Reading tonight.

Daniel Rogerson: A theme that has emerged from the debate is that the Bill means different things in different parts of the country. In London it will undoubtedly be seen as enabling Crossrail to be constructed. That has been discussed, most notably in the contribution from the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), but more widely there may be some confusion about whether this is the right time to introduce it, as the spokesman for the Conservatives, the hon. Member for Bromley and Chislehurst (Robert Neill), said, and how the scheme will work and what safeguards there will be for local businesses and communities.
	As I said in my intervention during the Minister's contribution, the Bill falls between two positions. One would be to concentrate on Crossrail and ensure that the enabling powers were in place for the mechanism to work in London, to see how it works, whether it can be delivered, and whether the money required is raised through that mechanism. The other would entail a more fundamental examination and reform of the way the business rate system works. My party would favour the localisation of that process as part of a genuine process of localism. The Minister was proud of the list that he read out, but if he were to discuss that with local authority members, many would feel that that was not a radical step giving them the tools to change the world for the better.
	The Bill is focused on Crossrail and allows some engagement with the local business community and some options for local authorities to make a change. However, it does not allow fundamental reform. Through their reasoned amendment, the Conservatives seem to have decided that they are happy to throw out the Crossrail baby with the legislative bathwater. If we reject the Bill on Second Reading, we are effectively setting back progress towards Crossrail. Although we share many of the concerns that have been expressed about provisions in the Bill and about the safeguards for business at this crucial juncture, we think that it would be wrong to reject the Bill when it has such an important job to do with regard to Crossrail and the funding for that.

Bob Neill: I understand the point that the hon. Gentleman makes, but I am sure he will understand that the rules of parliamentary procedure are such that it is difficult to cast the motion in such a way that the Bill would only give effect to Crossrail. I am sure he will understand the thrust of our argument that we want Crossrail to proceed without being burdened with the other provisions.

Daniel Rogerson: I am grateful to the hon. Gentleman for setting out his position once again. Having made those points in a general debate on Second Reading, he could have aired them again and had them resolved in Committee. If he had made it clear that that was his party's intention, we would not have been forced into an either/or argument on some extremely complex issues. The Minister will no doubt understand that our support at this stage is not equivalent to a blank cheque to support the Bill. We will have many concerns to raise as the discussion moves on.
	Outside London, eyes will be focused on the Bill's slight reform of the business rate, which is important for the businesses that will be directly affected. As we heard from other hon. Members, the organisations that represent those businesses have been keen to point out that big risks are involved. Their fundamental argument is that there should be no taxation without representation. It was good to have an insight into the Christmas viewing of the hon. Member for Bromley and Chislehurst. We share that principle. I am a little concerned that in the Government's responses so far, they seem to be saying that although the process works effectively for bids, with the double-lock vote and so on, and the opportunity for businesses to be consulted, to have the final say and to be involved in what goes on from there, there is not the same safeguard in much larger and more important schemes. That is a problem.
	The Liberal Democrats believe that the Bill is a missed opportunity to reform local taxation altogether and radically shift the balance of funds raised and spent locally; it could have been the first step away from the Britain that is the most centralised country in Europe outside Malta. The Lyons inquiry has already been debated in the House many times. It has said that a significant increase in the proportion of expenditure raised locally would assist in the revitalisation of local democracy and its strategic role. That may hint that the principle might be acceptable in certain circumstances, but it does not concede the wider point that local authorities could be trusted to be more involved in raising money locally and justifying the expenditure to the local community, businesses and electorate. The Government should have had that fundamental aim in drafting the Bill. That would have allowed them to look at the Crossrail issues and the reform would have been wider, which many would have welcomed.
	There is a real danger that the Bill will set back the positive relationships between businesses and local authorities, which, as we have heard, have been moving forward and delivering through bids and other mechanisms in their areas. That is a real concern. Why concede the principle of locally collected business rates without allowing local authorities to engage fully in that practice?
	A useful change adopted by the House has been the hearing of evidence first hand from a wide range of organisations at Public Bill Committees. No doubt our Public Bill Committee will hear from those who think that the Bill is a positive step and those who are far more concerned about it. Clearly, businesses are ready to engage with some proposals of this kind, but they rightly want firm safeguards so that concerns about an ever-increasing taxation burden, at a time when even slightly increased overheads could mean the difference between bankruptcy and insolvency, can be addressed and the voices can be heard. The Prime Minister himself has instructed Her Majesty's Revenue and Customs, for example, to do all it can to support businesses going through short-term difficulty. It would be against that trend if proposals such as these could be imposed on businesses in the local community without their having had the chance for a final say and for thoroughly opting into the process.
	We have heard a great deal about business improvement districts as an idea of how such a principle could work. It was instructive to me, as a relatively new Member, to hear that the Minister was instrumental in bringing them in; I am sure that he will want to explore that if he joins us in Committee. What the BID mechanism tries to provide is very different; there are some key local renewal projects to encourage investment. However, the fundamental point is how businesses can be consulted and reassured that they are not simply a cash cow, but very much part of the process of coming up with a vision—and not only funding it, but delivering it and ensuring that it is realised.
	BID approval requires a majority of the liable ratepayers and that the aggregate of rateable values voting in favour exceeds those voting against; that is the double-lock system to which the Minister referred. Such a provision is in the Bill for certain circumstances—when more than a third of the eventual project is to be funded through the mechanism. That provision is there, but my concern and that of businesses is that it is not there in all cases. Clearly, if the Bill is enacted, that will be a problem for many people.
	BIDs can choose to exclude certain businesses from paying the levy; the Minister has said that he may envisage parts of an area being targeted for funds. Those are the sorts of questions that people will have. There is a fear that the measure could be an overall levy, on top of the existing business rates structure, to fund projects that a local authority might have wanted to fund for some time, but lacked the money to do so.
	I appreciate that in some cases it is difficult to demonstrate additionality. However, it is crucial that businesses have confidence that in any system such as this the principle of additionality will apply. A similar point came up in the debates between the Minister, the hon. Member for Bromley and Chislehurst (Robert Neill) and I, during the Planning Bill, about the infrastructure levy and how it would work. Such measures must be designed to provide something and enable development and genuine economic benefit.
	Will the Minister reconsider the question of a ballot and return to it later to meet the concerns shared by many hon. Members—that circumstances are likely to occur in which a local authority imposes the measure without there having been a ballot? That is the business community's fundamental and major concern, and a change on that issue could go a long way towards allaying people's concerns about the Bill.
	There is much to be said for how local government structures work in other parts of the world in raising money, engaging with electorates and ensuring that there is collective support for measures. In the United States, for example, there are ballots when major infrastructures are to be funded through whatever mechanism is appropriate in the state and a local authority is allowed to pursue. We should move towards such a process, in which the business community and local residents have far more of a say in opting to support major infrastructure projects that could put a significant financial burden on the local authority and the business community.
	Under the United States system, the powers available to local authorities are very different and they vary in different states. However, we should aspire to provide that sort of example; that would go far further than the measures outlined by the Minister to engage people and ensure that everybody has a say in the financial commitments for a community and in delivering the community's wishes for its future.
	As I said, the Bill raises questions about how the rateable value system works. Last week, I met representatives of St. Austell Brewery in my constituency to talk about the problems that the company's pubs are experiencing. They were keen to get across to me the fact that the smoking ban and changes in people's spending behaviour because of changes in the economy mean that the rateable value of some of their pubs will be affected. The system is very slow to catch up with that. The problem is that businesses are dealt with at a certain rateable value, and it takes a long time for them to get across the message that their business has changed fundamentally and that the premises have a different value. Businesses would have welcomed more exploration of such questions in any Bill on business rates.
	As we have heard, next year the rateable value formula will be reviewed. There are concerns that although the threshold is set at £50,000 at the moment—although that is not in the Bill—that may well change in future and many other businesses may be drawn in. That does nothing to allay the fears of those outside who see the Bill as potentially dangerous or negative. The Government's ability to see the economic future has been drastically called into question in recent months. We could see Government Ministers in the role of Michael Fish, who said in 1987 that everything was going to be fine—and then the hurricane struck. All of a sudden we find ourselves in the worst economic circumstances for decades, if not centuries.
	There is a need for greater clarity in the Bill. Clause 6, which deals with the consultation process, has little detail about how consultation with business will be conducted. Having said that we favour a ballot system were the Bill to be enacted, I should say that consultation will need to be undertaken extensively prior to that to ensure that there is real debate. We want to hear more about how such consultation should take place and how businesses can have confidence that their voices will be heard. Given that local authorities will also be contributing to these schemes, that also applies to how the debate will be conducted locally for local residents and other organisations in the voluntary sector and so on.
	The impact assessment that accompanies the Bill states that assurance will be provided by internal safeguards as well as via external audits undertaken by the Audit Commission. However, inevitably, there will be concerns about consultation. We heard about a specific London-based example regarding the congestion charge. On a national scale, the recent programme of post office closures is another example of consultation. Many communities were given the opportunity to be consulted, but all the evidence that they presented in those consultations came to nothing, and in the end valuable local institutions were lost. That devalued concept of consultation needs to be addressed—the problem is not insurmountable. If there is to be consultation, it must be genuine and there must be a much clearer vision of how it is to be conducted.
	We will explore many of those issues in Committee, so it is a shame that the Conservatives have chosen to take an all-or-nothing view at this stage. However, the House seems to be more or less unanimously in agreement that we should not put Crossrail in jeopardy. That is why the Bill, although it needs to be improved drastically, as I hope will happen during its passage, deserves a Second Reading. We have been waiting 18 years for Crossrail. I saw somewhere on a website that we have been waiting for it since Brunel's time, so we can go even further back. That is a name that resonates with me as I come up here on the Great Western line.

Bob Neill: He was a Conservative.

Daniel Rogerson: I am sure that the ghost of Brunel would have something to say about that.
	An efficient transport system across London is vital to remove congestion, to increase productivity and to deliver economic growth in the constituencies of hon. Members across London. Pulling back from building Crossrail is not an option. Congestion in London's already overcrowded system would worsen and conditions for passengers would deteriorate. International business could relocate to Europe, away from the UK altogether. It is vital to business and to London that the scheme goes ahead. We have had that consultation process, as well as the tortuous progress of an Act through Parliament. Hon. Members who sat on the Committee on that Bill certainly felt that they had done their duty to the House. We have had a consultation process and there is support for the scheme, and it would be hugely damaging to send any signal that it should be brought to a halt or rejected or that the finances enabling it to come to fruition might be curtailed or prevented from being secured. Whatever disagreements we have about the nature of the Bill and the clumsy way in which a broader business rate supplement has been piggy-backed on to what could have been a Crossrail funding Bill, there can be no doubt that the Crossrail project is urgent and must not be further delayed.
	My colleagues and I will reluctantly support the Government tonight—reluctantly because there are many ways in which they could have gone further to work with businesses to deliver a Bill that allayed their concerns and assured them that the aim is a partnership that can deliver for local communities. We have been advocates of Crossrail for many decades, and I am afraid that we cannot join the Conservatives in opposing it at this late stage.
	There is an enormous amount of work to do in Committee. Britain needs a Bill of this nature, but it needs to go much further in its consideration of business rates. It is a great shame that the Bill falls between two objectives, but I hope that the House will give it a Second Reading. However, I am sure that at later stages and in another place much can be done to improve it and to ensure that it is more fit for the purposes that the Government claim for it.

Paul Farrelly: I want to give general support to the Bill, which advances modest reforms to the uniform business rates regime that has been run nationally since its introduction with the ill-fated poll tax 1990. The poll tax—I am sorry to mention it twice in two sentences—was swiftly replaced, but this small amount of discretion locally to tinker with business rates has been a long time coming. Importantly, it is not mandatory—no council will be forced to implement a business rate supplements scheme. It also gives local businesses a strong voice in the introduction of any such scheme and over the projects for which any funds raised are earmarked.
	That said, I have concerns about the operation of the business rate regime that I hope to highlight with specific examples after these short opening remarks. I promise that I am not going to mention Boris, London or Crossrail. I want to deal with some of the potential benefits outside the capital, but also some of the flaws in the current system that assist abuse. In short, I want to talk about some of the good intentions in the Bill, but also some of the bad apples out there abusing the system. That issue should be addressed with further reforms, possibly as the Bill goes through the House.
	In my area of Newcastle-under-Lyme and north Staffordshire, one of the biggest challenges that we face is economic regeneration in a traditional manufacturing and former coalmining area. It will not have escaped the notice of any hon. Member—not least the hon. Member for Lichfield (Michael Fabricant) and my hon. Friend the Member for Stoke-on-Trent, South (Mr. Flello), who are both here—that last week, on practically the first working day of the year, Waterford Wedgwood, one of north Staffordshire's biggest and most renowned employers, went into receivership. Indeed, Wedgwood's employees are today expecting to learn their fate. Like my colleagues locally, I am in touch with Government Departments, agencies and our local Potteries trade union, Unity—its general secretary, Geoff Bagnall, its deputy general secretary, Garry Oakes, and officers in particular—to see what help and advice can be offered.
	In Newcastle-under-Lyme, large swathes of land, particularly around the central ring road, are awaiting development. As in other towns across the country, how they are developed will determine not only the economic future of the town but how it looks and feels for the foreseeable future. The issue of land acquisition by the public sector has been one of the key stumbling blocks to joined-up regeneration in our area for many years. A business rate supplements scheme might provide useful extra funding—an additional tool in the armoury, as it were—to make the town more the master of its own future. Public land acquisition would help to safeguard against speculative developers playing the planning system, cajoling local councillors and getting away with poor design, especially as the siren calls of "Any development is welcome development" will only grow stronger during a downturn. In my area, it may well prove popular with local traders and property owners in a traditional market town that is under threat of further huge supermarket developments right round the town centre, not only on the edges of the town.
	Together with a coherent local plan, having more wherewithal for public ownership of key sites would act as a bulwark against—or perhaps provide a backbone for—weak, old-fashioned, unimaginative, unambitious or simply perverse planning officers who cave in too easily. That happened yet again in Newcastle before Christmas. Our head of development control, who goes largely unsupervised in a dysfunctional planning department, almost single-handedly pulled the rug from under the feet of councillors, his planning colleagues and experts from Urban Vision North Staffordshire, our local architecture and design centre, by recommending the approval of a Lidl discount store and budget Travelodge hotel, right in the town centre, against all expert opinion and emerging site guidance. Had the site been in public ownership, that could have been resisted. That failure is ultimately political and managerial at the highest level of the council. However, there is no doubt that if these sites were in public hands, in Newcastle-under-Lyme, as in many towns and cities up and down the land, we would be more masters of our own fate.
	As in many other areas, housing is another example of major concern where a business rate supplements scheme may well have a part to play in well thought out projects to revitalise the economic fortunes of town centres, in particular. Again before Christmas, representatives from our registered social landlord, Aspire Housing in Newcastle, informed me almost lackadaisically, in a meeting about a totally separate matter, that they did not see the building of new social housing as part of their so-called core business any more. Newcastle alone has a waiting list of 3,000 for social housing. We have regional and sub-regional targets for house building aimed particularly at encouraging town and city-centre living in Newcastle and Stoke-on-Trent. Aspire Housing owns all Newcastle's former council housing stock. If it does not intend to build social housing beyond schemes already in the works, it is hard to see who will, especially at this point in the economic cycle. Frankly, that is a dereliction of duty that I am pursuing with it vigorously. However, it is another example of a development, coupled with key public site acquisition, which meets a need, which might make town centres more sustainable, and which otherwise would not happen, where a BRS scheme might have a role to play and local businesses may well support it in their own interests.
	In that respect, I discussed with my local council the option of a business improvement district—an idea introduced by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), the former Minister—that would be backed by regeneration agencies to help to revitalise the town centre. A business rate supplement scheme, as provided for by the Bill, would allow for a further alternative in co-operation with local businesses. It is absolutely inconceivable in places such as Newcastle-under-Lyme and north Staffordshire that anything would be implemented without such co-operation or against the interests of local business.
	When I refer to local business, I am talking about the vast majority of local employers and traders, as well as national firms and store chains, which are socially responsible and pay their taxes and business rates. However, in Newcastle and north Staffordshire, as in other areas, there is a small minority of unscrupulous so-called business people who do not. They let other suppliers and creditors suffer, as well as the taxman, local councils and the Government's business rate pool. I am not talking about entrepreneurs who genuinely set up firms and take risks that do not work out in a free market, or about businesses, of which there will be a growing number in the recession, which find they cannot cover their costs and have to close. I am referring to a small minority of parasites, frankly, who have no intention of paying their dues from the outset and who hide behind limited liability and deliberately play the system to avoid business rates.
	I hope, therefore, that any change to the business rates system, such as the provisions of the Bill, will contain measures to address flaws in the current regime. First, breaking the link between local collection and the ability to spend business rates locally gives councils such as mine little financial incentive to pursue serial evaders seriously. After the passage of the Bill, even if councils set up a business rate supplement scheme, they will still be collecting agents for central Government for the vast proportion of business rates and, importantly, they will not suffer financial loss for any lack of rigour in tackling evaders. Secondly, many of the people in question serially go bust and leave little or nothing by way of assets because they do not own the properties from which they trade, or because they have hived them off into separate companies or trusts. Business rates will still be collected from the operators of business premises and not from the owners or landlords—a point that has been made by Members in all parts of the House. Reforming that process would aid collection from such evaders and I urge the Government to consider addressing the issue in the Bill, or in further reforms to the system. Thirdly, on the detail of a business rate supplement scheme, I and honest traders in my town have serious concerns about how consultation and balloting arrangements in the Bill—or any subsequent regulations—would cater for evaders. Put simply, they do not operate on a level playing field, so why should they have a voice or a vote, and how could such a situation be prevented? Such details need to be discussed.
	I shall illustrate those concerns with a specific example from my area, to give them meaning. We in north Staffordshire are by no means alone in suffering from the actions of such people, but there is one particularly shocking case that I have taken the time and trouble to investigate and pursue over the last nine months as the local Member of Parliament. In the past three years, business rates written off by Newcastle-under-Lyme borough council have more than doubled from £195,000 in 2005-06 to nearly £420,000 in 2007-08. That is a substantial amount for any second-tier authority, and had the borough council collected it and been able to spend it locally—or not—the effect on the council tax would have been enormous. The council has lost a serious amount of money. Those figures dwarf the amount of council tax write-offs from ordinary taxpayers. In March 2007, for instance, £252,000 was written off in business rates for the financial year, which was almost 10 times the amount due from council taxpayers that was eventually written off. Sadly, the council, like many throughout the country, tries to keep those figures secret. It should not. The public have a right to know how the system is operating, and it is perfectly possible for councils to be more robust by shaming serial offenders as a discouragement to others tempted to do the same who give towns such as mine a bad name in business.
	I come to the worst example that I have found locally. In March last year, the borough cabinet—behind closed doors again—wrote off more than £13,000 owed by a firm running the Albion public house in Newcastle town centre. The Albion is an old pub—coincidentally, my uncle's mother and father-in-law used to keep it when I was growing up. This was the fourth time in four years that the council wrote off its business rates, and for four different pub operating companies that went into liquidation. The owners and directors of the companies were the same: two local characters called Anthony William James and Peter Andrew Whieldon. Piecing together all their companies' affairs from Companies House and liquidators' reports, one finds that the track record of serial insolvencies and non-payment from their numerous pub companies since 2003 runs as follows: more than £47,000 in business rates was written off by Newcastle-under-Lyme borough council, another £57,000 in business rates was owed to Stoke-on-Trent city council, and at least £184,000 in VAT, tax and unpaid national insurance was owed to Her Majesty's Revenue and Customs. In all, their failed companies have left a trail of £1.3 million in unpaid debts across the Potteries, but they are still in business and, by all accounts, they have never had it so good.
	I am not making a political point, but what makes the case particularly shocking is that Peter Whieldon, one of the co-owners, is a local Conservative borough councillor. Until I pursued that track record, he was vice-chairman of Newcastle-under-Lyme council's financial audit and risk sub-committee. He is still the treasurer of the local Conservative association. His current companies run at least three pubs in Newcastle, and others in Stoke-on-Trent, which make people's lives a misery in town on Saturdays by showing live Stoke City matches, accessing dodgy satellite signals aimed at Scandinavia and elsewhere. They are doing a thriving trade, but to add injury to insult, the resulting antisocial behaviour causes some traders who pay their business rates to shut up shop early and lose business. As well as football's premier league, the police have serious concerns.
	On business rates, I want to stress that the present regime provides no incentive financially to a local council that shows no determination—as a matter of good practice or, as in this case, to uphold civic values—to pursue such serial evaders seriously. The council as a collector for the Government suffers no financial loss. The premises in question were not owned by the companies liable to pay the business rates. The freehold of the Albion pub, for instance, is owned by Marston's. When the companies go bust—surprise, surprise—the landlord, and main drinks supplier, does not appear on the list of creditors. Either the landlord is very prescient, or that is prima facie evidence of preferential treatment of a key creditor and of tolerance of dubious business practices over quite a number of years, which can only detract from a reputable brewery's standing in the community.
	If the business rates regime allowed councils to collect business rates from the actual owners of properties—either generally or in the special circumstances that I have outlined—the opportunity for evasion would be much more limited. I encourage the Government to consider such a reform during the passage of the Bill. Locally, we pursued the council over the affair after receiving many complaints from the public and local businesses. A letter was sent last April, for instance, to the Conservative leader of the council, Simon Tagg, to ask not just why the council always wraps itself in so much secrecy, but what straightforward measures the council had taken to protect itself and the Government's business rate pool, given the track record, by means such as not allowing rates to build up over a year but instead demanding them up front or in instalments, which is the case for ordinary council tax payers The leader replied that existing legislation does not allow the council to do that. He also wrote:
	"The Council's finance department cannot take account of 'previous bad history' when issuing demands because they have to treat each financial year separately."
	That defies common sense and any good business practice, and I would like to hear from the Government whether that advice, no doubt given to the leader by his officials, is correct. If not, I will further pursue the matter locally. If it is correct, I would urge the Government to amend the Bill to give councils common-sense flexibility in how they pursue such cases.
	I have written at length several times to the council's relatively new chief executive, Mark Barrow, who has been in post for about 18 months now. The first time was in April, when I pieced together the track record. I wrote again in June and again at the end of July after receiving no substantive reply. I am afraid that at that point, for the first time as a Member of Parliament, I invoked the Freedom of Information Act, but pretty much to no avail. Apart from general procedural details about the new standards procedure for local councils, which I knew about by that stage, I received no answer to specific questions and heard no more. I wrote again on 4 December, expressing grave disappointment and again citing the Freedom of Information Act. This time I received a two-line acknowledgment, dated 8 December, from the council's freedom of information co-ordinator, promising me a response about the business rates within the statutory deadline of 20 working days As of today, 12 January, there is still a resounding silence from my council and its chief executive over the affair.
	The point that I wish to make about the reform of the business rates regime is that if such things are happening in my area, they are happening up and down the land to the detriment of government, councils, council tax payers and honest business rate payers. There is some local evidence that the more widely such behaviour becomes known—traders talk to each other all the time—the more others follow suit, either just because they can or because they cannot otherwise compete on a level playing field. Have the Government calculated the total cost of business rate write-offs each year, and have they commissioned any studies to estimate how further reforms such as those I have suggested may help to reduce that amount, to the benefit of everybody across the country?
	Councils could either be helped by being able to levy business rates on the owner of a business property, or they could be given specific duties to pursue serial evaders, with financial penalties on councils as an incentive. That would apply particularly to councils such as Newcastle, which has hardly pursued with zeal the affair that I have mentioned or complied with its statutory duties under FOI legislation. If that is the frustrated complaint of the local MP, what chance do ordinary local council tax payers and honest businesses have of ensuring that the business rates system operates fairly?
	I shall draw my remarks to a conclusion by discussing openness. A further reform should involve a duty on councils to be transparent about write-offs and the non-collection of business rates in general. In the case that I mentioned, the council's standards committee has now considered a complaint against Councillor Whieldon, concluded that there is a case to answer and appointed an investigator. However, that has all been done behind closed doors. Nothing has been said in public, and nine months on I have not been contacted. I hope that the review has not been set up to clear the council and to whitewash the procedures that it adopted.
	One of the more farcical elements of the case is that the only thing that has been made public is an investigation into how the information came into the possession of a Member of Parliament—a leak inquiry into myself. As part of that investigation, last July the council reviewed its policy of writing off business rates in secret and gagging cabinet members and ordinary councillors from saying anything to anybody, even in the public interest. In a paper to its cabinet, the council surveyed the policies of nine councils in Staffordshire and labelled them—

Mr. Deputy Speaker: Order. I have given the hon. Gentleman a fair amount of licence, as this is a Second Reading debate, but on balance it now appears that he has used the term "business rates" to talk about business rates in general, rather than to speak within the scope of the Bill. There is a certain amount of flexibility on Second Reading, but I think that he has exhausted the possibilities of it.

Paul Farrelly: As I said, I am drawing my remarks to a conclusion.

Mr. Deputy Speaker: Order. Hopefully the hon. Gentleman is now doing so quickly, in view of what I have said.

Paul Farrelly: My point is to suggest further reforms that may be introduced as amendments to the Bill, which reforms the business rates regime, as it passes through the Palace of Westminster.

Mr. Deputy Speaker: Order. Perhaps the hon. Gentleman should hope to get on the Committee in order to do that, but he will still have to do it within the terms of the long title of the Bill.

Paul Farrelly: Indeed, Mr. Deputy Speaker, I shall make such a request of my Whips.
	In conclusion, I shall support the Second Reading of the Bill tonight. However, I urge the Government to make the wider reforms that I have mentioned to tackle abuse of the system and to make councils more open about their collection records. Otherwise, council tax payers in Newcastle will gain the impression that ordinary families will be pursued to the limit in hard times, while determined business rate evaders will get off scot-free. Honest businesses and traders in my area do not like what people such as those I have mentioned are up to, and the Government can ensure that our councils are better helped so that they do not get away with it.

Brian Binley: I follow an interesting speech by the hon. Member for Newcastle-under-Lyme (Paul Farrelly), in which he made remarks about a person whom I know, and knew reasonably well in the past. I was concerned that such remarks should be made, and I seek your guidance at the outset, Madam Deputy Speaker. It seems to me that a person ought to be given the right to put the record straight if they feel that it has not been stated well in the House. I do not know whether it was in this case, but I wonder whether I might appeal to the person concerned to write to me so that I can put the record straight, perhaps on Third Reading. I would be grateful for the opportunity to do so, and I seek your guidance on that point, Madam Deputy Speaker.

Madam Deputy Speaker: Of course, Members are responsible for what they say in the House about either another Member or people outside the House, but clearly that action is open to the hon. Gentleman.

Brian Binley: I am most grateful for your guidance, Madam Deputy Speaker.

Paul Farrelly: The local councillor was given full opportunity last April to respond to the matters of fact. He not only declined to do so but put the telephone down on me. The matters of fact have been laid in the public domain without the benefit of privilege.

Brian Binley: I am grateful for that clarification, and I shall take it into account, as I am sure you would expect me to, Madam Deputy Speaker.
	I move on to business rate supplements, which are the subject of the debate. We have heard a lot about Crossrail, but I shall leave that issue alone. I spent two and a half years on the whole thing, and I am very doubtful whether it will ever get off the ground. That is another matter altogether, and I have made that point clear in the House on a number of occasions. I have no reason to change my mind, and I do not want to take up valuable time by proceeding through the whole Crossrail debate again.
	The Minister for Local Government said that this was not the best of times from a business perspective. That was pretty much an understatement, and I wish to set out the business atmosphere and climate that prevails, because it has a bearing on the debate. Many businesses would tell the House that they are in one of the worst of times, and that they face immense problems. They are burdened by the Government's activities in recent years, which make it more difficult for them to face those problems.
	I shall give a brief resumé of the current business climate. In 2007, some 13,500 companies failed. The Forum of Private Business tells us that in 2009, some 200,000 businesses will fail. That is a pointer to the almost unprecedented economic situation that the businesses of this country have to deal with. KPMG, the well-known accountancy business, has stated that 150,000 companies will become insolvent in 2009, which will be the highest number since records began 50 years ago. Unemployment is at more than 2 million, and is projected to be 3 million by the end of 2009. The interesting figure was released last week that new bank lendings in the third quarter of 2008 were £447 million, compared with £16 billion in the same quarter a year ago.
	Those figures are all pointers to an economic climate that is unprecedented in business terms. In Northampton, businesses tell me that turnover is already down by 10 to 20 per cent. For some businesses, particularly restaurants, it is down by 30 to 35 per cent. Most of those are owned by friends from the Bangladeshi community, who run some of the most impressive Indian restaurants in the country. I am happy to pay tribute to them, but tragically they are faced with a 35 per cent. fall-off in turnover. It is as though they had fallen off a cliff.
	The Prime Minister now admits that the downturn will be longer and deeper than we thought. That comes after the Chancellor told us in his pre-Budget report that there would be a recovery in the third quarter of 2009. The Chancellor said:
	"We are far from through this"
	when asked about that projection, which perhaps hints that although he did not quite want to say "I was wrong", he was not far from saying it. Barry Potter, the director of the International Monetary Fund, said that it was "very optimistic" to forecast that Britain would begin to recover in the third quarter of 2009. It is therefore true to say that we have not done away with bust. We speak against a background of a serious recession, so what do the Government do? They propose that we think about levying extra cost, through an extra tax, on businesses, which are suffering from massive past burdens.

Andrew Love: What would the hon. Gentleman do? Nothing.

Madam Deputy Speaker: Order.

Brian Binley: I am delighted to offer the sedentary speaker a reply—we would guarantee loans—

Madam Deputy Speaker: Order. We cannot widen the debate. There are certain parameters, and the hon. Gentleman has been given some licence. Perhaps he will now tailor his remarks accordingly.

Brian Binley: Of course, I accept your guidance, Madam Deputy Speaker, but you will recognise how provoked I was.
	Business has faced £66 billion of regulatory costs since the Government came to power. There are 800,000 people on the public sector payroll; only the wealth-producing sector has to support that. I am worried that we have seen little concern about that from Labour Members. All we have heard from them about the trials and tribulations of business people seems to involve the small minority who deliberately set out to twist the system. I am all for belting them as hard as we can, but, after 40 years in business, I have met very few such people. I have always been proud of the ethical base of most businesses in this country, especially in the small and medium-sized enterprise sector. I would like that to be on the record, and it will be now. I am grateful for the opportunity to do that.
	In addition to extra costs that business has to bear, corporation tax has increased for the SME sector.

Madam Deputy Speaker: Order. Again, the hon. Gentleman is widening the scope of the debate. I ask him to concentrate his remarks on the Bill.

Brian Binley: Of course I will, but I am sure that you understand, Madam Deputy Speaker, that the background of the economic climate is a vital part of the debate.

Madam Deputy Speaker: Order. The hon. Gentleman has had the opportunity to present some background to the debate. I hope that he will now move on to the content of the Bill.

Brian Binley: Absolutely right.
	We face a massive additional tax—or potential for it—in the business supplementary rate, which is the subject of the Bill, but it must be judged against the background of the business climate. You are right, Madam Deputy Speaker, that I have argued that enough, but it is important to make the point.
	Where did the idea for a supplementary business rate come from? It will not surprise you, Madam Deputy Speaker, to learn that it came from the bowels of Government. I believe that it was first raised in a White Paper in 1998. The idea did not therefore originate from the business sector, the general public, or even local government. It came from the heart of national politics—this place. After its publication in the 1998 White Paper, it resurfaced in a Government-sponsored balance of funding review in 2004. We face a Bill that is thoroughly new Labour, Government sponsored and—business feels—thoroughly anti-business. Business says that.
	I want to quote from businesses that have expressed deep concern about the Bill. It is right that the House understands the breadth of feeling in the business community about the measure. On 23 December, the CBI, which represents a third of the private sector work force—240,000 businesses—stated:
	"The CBI is concerned that BRS could add significantly to the business tax burden."
	That is the heart of the matter. The CBI does not trust BRS not to widen, and become the thin end of the wedge and a greater tax than it is innocently portrayed to be. It does not trust the Government on the matter.
	The quotes are all from recent statements. On 6 January, the Institute of Directors said:
	"The IOD strongly opposes BRS in principle. They would be an additional burden on business which bears no relation to profile and could jeopardise their commercial viability."
	If the Government do not take that statement into account, I do not know what they will do about placing further charges on business.
	On 9 January, the British Chambers of Commerce, representing more than 100,000 businesses, which employ 5 million people, stated:
	"With the UK economy facing a recession the BCC is opposed to the introduction of BRS proposals across the country which could cost business up to £597 million per year."
	I emphasise £597 million a year, to be doled out in a way that—in many business men's eyes—will not help businesses. They are most concerned that the money will leak out and be smoothed into other areas of activity. That is one of the Bill's dangers—it does not tie up the way in which money is spent anywhere near strongly enough to meet with businesses' approval.
	The British Retail Consortium, which represents a massive part of the British retail industry, is especially concerned. On 9 January, it stated:
	"The BRC does not support the introduction of BRS... it has the potential to add significantly—and disappointingly—to retailers' costs.
	It saddles retailers with new costs when they can least afford it—it could add an extra £160 million a year to tax bills. Retailers face a massive £16.6 billion cumulative increase in rate bills from 2010."
	I do not need to point out to hon. Members how many retail businesses are going to the wall. They have read about high profile companies, but every Member will point to his own high street, shopping areas and retail businesses, and say, "He's gone", "She's gone", "That's up for sale" and "That shop is now vacant." That will increase dramatically in the coming year or two years—perhaps even three years.
	Let us consider construction, which is vital for this country. The Government say that they want to encourage it and look to it to build more houses, provided that they can get credit moving. On 6 January, the Federation of Master Builders stated:
	"At a time when 60 per cent. of FMB house builders are reporting falling workloads the last thing builders need is another tax."
	Just at the time when we may begin to see green shoots—my prediction is April 2010; we might tell the Chancellor that—we provide the opportunity to levy a new tax on business. The Federation of Master Builders is aghast.
	The Institute of Chartered Accountants in England and Wales stated:
	"BRS could prove a tax too far—it could add up to 10 per cent. to a company's council tax bill."
	Moreover, the Forum of Private Business stated:
	"The FPB is disappointed that despite vocal opposition the Government intends to press ahead with this legislation. It is deeply unpopular. It would be a considerable barrier to growth."
	The Federation of Small Businesses stated:
	"The FSB opposes the Bill. Small business rate bills are on average proportionally three times greater than larger businesses. The FSB will continue to oppose the BRS."
	There could not be a more solid array of business organisations lined up against a proposal from a so-called business-friendly Government. We are for ever inundated with messages from the Prime Minister, the Chancellor and Labour Members about how they understand, support and want to help the business sector. One would therefore have thought that they might listen to business and help it in the way it wishes to be helped. However, the Bill is an example of how all the Government's words come to very little when action is required. As my grandmother said, and as I repeat again and again, fine words butter no parsnips. It is no accident that the business sector's trust in the Government and the Prime Minister has dropped dramatically, and this Bill is one of the reasons.
	The attitude of business is perhaps best summed up by a statement that I received from Mr. Richard Gayler of Scanfit Ltd and which is supported by many business leaders in Northampton, South:
	"This is another stealth tax. My local Council"—
	he is not a Northampton man, nor is Scanfit a Northampton business; he wrote to me through a small business contact—
	"treats me as a cash cow in exchange for what I see as no increase in services provided.
	Many companies are thinking of making redundancies because of the current economic environment and an increase in business rates will mean they will have to consider making even more."
	No wonder business is horrified at the prospect of another tax. Businesses are horrified for a number of reasons. They have written to me in their hundreds and said that the Bill is inadequate, ill prepared, badly written and deficient in many respects. That is the message that I have received from business about the Bill. The Government tell us that the Bill is intended to enhance business partnerships and recreate a better understanding between local government and business, yet business is totally opposed and concerned about the quality of the Bill.
	Let me voice some of those concerns, some of which have already been mentioned. There is a universal wish for a ballot on all projects. That is a must where proposals are made by local authorities. I have worked in local authorities as an elected councillor for nearly 12 years and I have been a party officer working at the constituency level for 50 years next year. That is a long time to be in politics, and one might feel that the effort that I have made to arrive in this place so late in the day has hardly been worth it. The truth is that local business is very wary indeed of estimates produced by local councils. Local business wants much more involvement in the business rate supplement process, if it comes to fruition, and therefore wants a ballot for all projects, because it knows that local government estimates can be so way out.
	We have seen even the Government's estimates being pretty off the mark. Dare I talk about the Olympics, Madam Deputy Speaker? Would that be unfair to the Government? What was it—£2.9 billion?

Madam Deputy Speaker: Order. Whether that is fair or unfair to the Government is neither here nor there: it is not included in the Bill.

Brian Binley: You are absolutely right and I thank you again for your guidance, Madam Deputy Speaker. But the very fact that local government estimates are no better than Government estimates is why local business needs to be involved at every point. Local business knows that often estimates cannot be trusted. That is why we cannot set the level at a third of a given project, as is proposed, because there are too many ways of perverting any projection for local business to accept it at face value. What guarantee does business have that local government will not understate a project cost? What is to say that local government will not say afterwards, "Oh yes, well, we should've had a ballot, because this has turned out to be more than a third of the total rate, but we didn't expect that when we made our projections"? It is just not good enough.
	Business is also concerned that there would be a reduction in spending on projects financed from Government sources. We have already experienced a reduction in the revenue support grant for local government because other items are reckoned to have more impact. Let me give an example. Grants for infrastructure have been used as a reason for not increasing the revenue support grant in my county. The truth of the matter is that grant is given and taken away, but we are still left with a lower base than we should have, had we received the proper amount of revenue support grant. We need a guarantee from the Minister when he replies to this debate that other Government spending can in no way be lessened because of the ability to levy an extra business rate on businesses.
	Let me talk about the concern about the level of rateable value. You will know, Madam Deputy Speaker, that it is suggested, although not stated in the Bill, that the level for payment of a supplementary business rate will be a rateable value of £50,000. I do not know whether the Government will confirm that that will be the level before the end of this debate, but the Bill does not come into effect until 2010. We shall have a rate revaluation in 2010 and many more businesses will be caught in the net of that tax as a result. What is to say that, if the proposal does not work quite how the Government wish it to, we will not lower the level of the rateable value relevant to the calling for a particular tax under the Bill to be paid? There is massive concern about rateable value and, in particular, about the fact that we will have a reassessment that could affect the whole thing. We will vote on the proposal now, have a reassessment and then find that many more businesses are caught in the trap of extra taxation.
	There is concern about consultation. I have had the experience—I was about to say "good fortune", but it was not good fortune—of being in a business caught up in local government consultation. I was a marketing and public relations professional for a long time, and the consultations that I saw emanating from local government were some of the most amateur and shoddy that I could expect to see. The lack of professional ability in that respect has been lamentable. It is therefore no wonder that business is concerned about the lack of good consultation.
	Business is concerned that BIDs payments will not be offset against business rate supplements. The BIDs project is excellent—I pay tribute to the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who introduced it—because it has meant that business and local authorities work in partnership. That was the essence of the project, which had the effect of bringing business and local government together more and creating greater understanding. The Bill will do the opposite, because business will not be involved in the project. The businesses might simply have the chance to vote, but that would pretty much be all, until the project ended. If there is a good BID project going, the very least that we ought to be doing is to offset the business rate supplement against that project. That provision is not in the Bill, at least not in a form of words that the right hon. Gentleman and I know to be meaningful.
	Let me introduce another point. I live in a sustainable communities project area. Northamptonshire is due to build 167,000 houses by 2031. It is expected that our population will grow by 50 per cent., and that most of the money for the infrastructure will come from—would you believe it?—the local construction industry. So the industry will have to make sustainable communities project payments on land, and perhaps pay a roof tax, and pay a business rate supplement on top of that. Asking it to take part in a BID project will simply not work.
	I want to make a final point on the loopholes in the Bill. I hope that the Minister is noting these points, and that he will respond to each one in as much detail as I have used in trying to make them to him. Businesses are worried about how the cost of administration will be constrained, and about how well the funds will be ring-fenced. They have seen in local government what is loosely called unofficial virement across budgetary silos, along with work not being properly classified in one area of activity and being moved into another. They are very concerned about this proposal.
	Businesses are also concerned because this is a long-term project. I have already mentioned that we are now in one of the worst business environments that we have ever faced, but we all hope that that will come to an end. In fact, we believe that it will do so. We might run a book in this place on when it will happen. Will it be in two years, or three? We do not know, but green shoots will appear, and that is the time at which we must take all the burdens off businesses that we possibly can. We want to release them from regulation and extra taxation, not add to their burdens when they are recovering from a recession that will do more damage than has been seen in living memory. After three years of recession, we shall have about 10 years of recovery—at least, that is what most business people tell me—before we get back to where we were in 2007.
	We shall also face a global challenge that will run for 30, 40 or 50 years. The only sector of our community that can fight that challenge is the business sector. It will be fighting massive growth from what is called BRIC— Brazil, Russia, India and China—and the underdeveloped nations. The world will be dramatically changed in business terms over the next 40 years, and this recession might have heightened that change. Yet the Government fail to recognise that every burden that they place on business is another millstone around its neck to be dealt with in the fight to stake our business claim in a global world.
	I have heard very little from the Government that shows that they understand the need to nurture and help the wealth-producing sector rather than adding to the regulation and burdens placed on it. That is what business is most angry about. That is what I meant when I talked about the fine words that emanate from this Government but are not carried through into real actions when it comes to nurturing, nourishing, growing and helping to sustain the business sector in this country. The business sector wants help and understanding, not fine words and promises that are not very meaningful. It wants help and real understanding, but the Bill shows that it is not going to get it from this Government.

Lee Scott: I shall try to be brief and to stick to the points raised in the Bill, which I am sure will please you, Madam Deputy Speaker. I agree with what the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) said earlier about Crossrail. I have been a supporter of Crossrail, both under the present excellent Mayor, Mayor Johnson, and under his predecessor, Mr. Livingstone. For many years, I have believed that it would benefit my constituents, even though it will not actually go through Ilford, North—it will go through the neighbouring constituency of Ilford, South. It will take pressure off the Central line and other lines in the area, as well as bringing in extra transport capacity. I fully support Crossrail; I believe that it is a separate issue from the remainder of the Bill and that it does indeed need funding.
	I do not agree with my hon. Friend the Member for Northampton, South (Mr. Binley)—

Brian Binley: Oh!

Lee Scott: He is shocked by that. I do not necessarily agree with his pessimism about Crossrail coming to fruition. I hope that it will do so as quickly as humanly possible, for the benefit of everyone in London and, indeed, the whole country.
	I should like to talk about business improvement districts. My hon. Friend the Member for Northampton, South paid tribute to the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) for introducing those provisions—

Andrew Love: He is getting worried, now.

Lee Scott: Indeed, the right hon. Gentleman is getting worried at receiving so many compliments from this side of the House. Of course, he is more than welcome to come over to this side of the House.
	Last Thursday, the hon. Member for Ilford, South (Mike Gapes) and I went to Ilford town centre to promote the business improvement district—the BID—that has been proposed there. It is precisely in this time of recession that we need such an arrangement, because we are seeing empty shops in our high streets. I shall not list all the shops that are going, and I pray to God that not too many more will go. I fear that some will, but I believe that the BIDs could help to stop that in these difficult times. We appeared in the local press only this week to persuade people to become involved in the BIDs and to encourage them to pay the business rate supplement that would be required. We are encouraging people across the board, in small and large businesses, although I believe that there is a particular onus on some of the larger businesses that perhaps have more resources to fund these arrangements than the smaller businesses, which might find that more difficult.
	I want to talk briefly about the BID in my own constituency, the Hainault business park, and to pay tribute to Mr. Jim Ridley and Mr. Chris Wyles, who co-chair the organisation. Before I came to the House as a Member of Parliament, I was the cabinet member in Redbridge for regeneration in the community, and we promoted the BID project with Hainault. There were some difficulties in the area, in relation to levels of crime and to the number of empty units in the business park. The BID project has enhanced the area by bringing in new businesses, closed-circuit television, signage, and extra police community support officers. Various other projects have been linked in and brought in funding from banks, from businesses and from the wider area. This is all making the business park a thriving area, and one that I hope will be more resistant to recession than other areas that do not have such an arrangement. I am a great fan of the project.
	Of course, the project was set up by means of a vote. In Ilford, everyone was fully engaged and fully involved in voting to get the extra funds. My problem with the provisions in the Bill is that consultation, however well meaning it might be, is simply consultation. It is not the same as engaging people in voting, getting them involved and enabling them to feel part of a project. I believe that that is where the Bill falls down. What we need is a provision for such voting, and certain guarantees in the Bill. I shall push for that if I am on the Public Bill Committee. Looking down at those on my Front Bench, I believe that there is a possibility that I might find myself in that position. I genuinely believe that we have to push for those provisions.
	You will be pleased to know, Madam Deputy Speaker—with no offence to my hon. Friend the Member for Northampton, South—that my conclusion will be brief rather than lengthy. We have heard about the problems of recession and if I may have a little latitude, Madam Deputy Speaker, I would like to say a few words about a small business whose owner came to see me shortly before Christmas. It does about 80 per cent. of its trade over the Christmas and January period. A bank that will remain nameless decided that it would be prudent to call in the overdraft facility before Christmas, putting that business in an impossible position: either the business was being given the keys to shut up shop or it would be allowed to trade its way through the difficulties in the Christmas period. The bank would not move. Fortunately, we introduced the business owner to a new bank, which was able to honour the overdraft facility and allowed him to trade through Christmas. I am delighted to say that the business had a good Christmas and is now able to trade on. The Government have to look further into the practices revealed by that case. I realise that that example may not be strictly relevant to the Bill, but I wanted to raise it so that the Minister may pass on those details to the Treasury to enable it to take some action.
	I obviously support the Opposition's amendment, but I also want it put on the record that I fully back Crossrail, which I believe is vital and needs our support. I would, however, like see votes on every issue that involves and engages our business community, so that it is part of any decisions taken.

Mark Field: The issue of the business rate supplement is nothing terribly new. Much as we like to present it, as did my hon. Friend the Member for Northampton, South (Mr. Binley), as coming from the bowels of the Government over the last decade, it actually goes back quite some time. At the heart of the legislation lies the age-old questions: how should large-scale infrastructure projects that promote economic development be most equitably financed; and should business be able to benefit without contribution when windfall gains benefit property values as a result of infrastructural development projects that are made for the common good? It is difficult to get our heads round those difficult issues.
	The whole conundrum of "value capture" has been with us in many ways since the great railway building mania of the 1840s and 1850s, when things were somewhat simpler. The promoters of the new railway networks that sprouted like bindweed across the UK during that crazy decade or so bought up the surrounding land, built houses and in that way paid back the capital costs of the new infrastructure. That, at least, was the theory; but all too often in practice, boom turned to bust. I wonder where we have heard that phrase before. The only investors who profited were those who either cashed out very quickly or those who were genuinely in the project for the very long term.
	I must confess that I share my party's concern that in today's desperately uncertain economic and commercial climate there could scarcely be a less opportune time to introduce what undoubtedly amounts to a new stream of business taxes. The Minister fairly argued that we are putting in place a regime that will have an impact not just now, but in the decades to come, and it is also probably fair to say that relatively few schemes will come onstream during these difficult and tumultuous times, but I none the less share many of the concerns expressed by those on the Opposition Front Bench that now is not the time to bring such a Bill into play.
	The very compulsion that is instrumental to a supplementary business rate is in stark contrast to the business improvement district initiative, which has been referred to by many hon. Members. My hon. Friend the Member for Ilford, North (Mr. Scott) made it clear in his contribution that BIDs had proved a great success in his own area. I have to say—I am surprised that the Government have not yet pointed it out—that the initiative was initially opposed by the Conservatives during my first term as a Member, but I acknowledge that there have been great successes in my own constituency. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) referred earlier to a new west end company and there is also the Paddington Waterside BID; a number of other areas are also keen to go through this procedure.
	As I have said, the real issue relates to what is a proper sense of consultation and true ownership of how the process works. Such consultation contrasts with the element of compulsion that is integral to this particular Bill. Consent by local businesses under the process in the Bill would be sought only for those projects where the supplement made up for one third of the total cost. There are some understandable fears that that arrangement will become a charter that ends up driving business both old and new away from the parts of the UK that most need regeneration. The Government must address that concern as they follow up how the legislation works. Nothing could be more disastrous than areas desperately requiring regeneration having it taken away from them simply because a lot of business melts away, but that could well be the case.
	I am lucky in that my part of central London has a thriving business sector, but there is no doubt that the problems affecting the retail sector as a whole might well impact on the west end. If secondary charges for various initiatives are levied on top of successful BIDs, it could well tip a number of businesses over the edge. The worst thing would be if vulnerable, small, independently owned and run businesses rather than the large-scale retailers went under. I hope that the Government will give some thought to that. If we look at the disadvantages stemming from the licensing regime over the past half decade, particularly since the Licensing Act 2003, we find that it is the small independent businesses that have proved most vulnerable.
	I hope you will forgive me, Madam Deputy Speaker, if I focus the remainder of my brief comments this evening at a slightly more parochial level, as the provisions on prospective Crossrail developments, which my hon. Friend the Member for Ilford, North mentioned, may have a significant impact on central London.
	The Business Rate Supplements Bill originates from the Lyons inquiry recommendation that local authorities should have greater flexibility, subject to certain safeguards, to raise revenue to invest in their local areas. I was unable to put the point to the Minister earlier, but the City already and uniquely has the ability to raise a supplementary business rate—reflecting the fact that in part it has a business franchise—so the notion is nothing new within the Square Mile. Given its long-standing support for the Crossrail project, the City's position is also understandably informed by the fact that the proceeds of the supplementary rate in the capital are earmarked for the construction of Crossrail. With that objective in view, the City supports the introduction of SBR in London at the Greater London authority level.
	I understand the concerns expressed earlier by my hon. Friend the Member for Croydon, South (Richard Ottaway) and other Members representing the suburban areas that are unlikely to benefit to any significant or direct degree from Crossrail—that this will be seen as a template and that it will benefit only certain parts of a particular district. London is obviously a very large area of 650 or so square miles. Crossrail benefits are regarded as being of national importance in the same way as the Olympics, but there is little doubt that a number of these infrastructure projects will benefit certain areas rather than others. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) made a robust defence not just of the Bill, but of the Crossrail project and spoke about the issue of additional stations. I am sure that he will appreciate, however, that a new station in north Woolwich will not be of much benefit to people who live in Hillingdon, Enfield or Croydon. Any Crossrail configuration will definitely go through my constituency and there will be great benefits, but we London Members need to appreciate the concerns that are felt elsewhere.

Nick Raynsford: The hon. Gentleman will recall that I argued in an intervention—or perhaps in my speech—that Crossrail has conducted research showing that the project will bring economic benefits for all parts of London, not just those parts directly affected by it.

Mark Field: I appreciate that, but I am sure that the right hon. Gentleman will also appreciate that some benefits will be more apparent, more direct and more extensive in certain parts of London in comparison with others—an inevitable consequence of living in a capital city. The issue is whether the Greater London authority rather than the boroughs provides the right way to implement the legislation. The exclusion of the City of London and the 32 London boroughs from those able to fund local development through an SBR highlights the importance of ensuring that the community infrastructure levy introduced by the Planning Act 2008, which can be levied at either the GLA or city-borough level, is available to fund genuinely local projects. The case for such a measure is further strengthened by the Mayor's proposed changes to the London plan. They will enable him to fund £300 million of his contribution to Crossrail from money obtained through the City and some of the boroughs via section 106 planning agreements made with developers in London's central activity zone.
	The requirement in the Bill for the Mayor to consult the City, as with the London boroughs, on any proposal to impose an SBR is in my view welcome, but I also understand the concern that consultation in this context may not be enough; there needs to be a sense of consultation with a certain amount of teeth. I hope that the Bill will not include an entitlement for any of the London boroughs to propose projects to be supported by SBRs without there being a proper dialogue in developing ideas for those projects. Of course, this is not immediately relevant, given that in London the SBR will initially be used just to fund Crossrail, but the situation cannot continue indefinitely.
	The Bill's formal consultation processes regarding who will pay for the supplementary business rate in London will also provide an opportunity to record business support for Crossrail. This support has been demonstrated by the substantial financial commitments made by BAA, to the tune of £230 million, and by the Canary Wharf Group, which has committed £150 million. The City Corporation has agreed to a direct contribution of some £200 million to Crossrail, and has guaranteed another £50 million from the further contribution of £150 million that it is trying to attract from businesses at large.
	Although I have long had some reservations about the route that Crossrail takes, now that the hybrid Bill is on the statute book it is essential that we avoid delay, because a delay will only result in crippling planning blight for those businesses and individuals who would otherwise be affected by the work. There will be some very important medium-term benefits from Crossrail. The demand for some 14,000 jobs during its construction will be an important source of employment during what promises otherwise to be very difficult economic conditions here in the capital. However, it is also an important signal to the world at large about London's intention to invest for the longer term. Delay now would betray a lack of self-confidence in our capital in its role as a leading global city.
	I want to finish on a practical note. The detailed provisions on the consultation process and the collection of the supplement suggest some significant complexities and additional expense for the billing authorities, including the City of London itself. We believe that the most practical way to collect the supplement would be together with the non-domestic rate, if that is what the Minister has in mind. I appreciate that this is likely to be discussed at a practical level in Committee, but I wanted to put on the record my concern, given the projected early introduction in London to satisfy the Crossrail financing requirements, that the administrative detail will need to be swiftly settled in order that the software can be adjusted in readiness for any such circumstances.
	I regret that I will be joining my Front-Bench colleagues in opposing the Bill tonight because I am concerned that this is not the right time to put such legislation into place. There are some important practical issues that will need to be ironed out, assuming that the Bill gets a Second Reading and goes through to Committee. There are also some important issues of principle regarding such legislation, which I would not entirely oppose. This has been an important opportunity for us to discuss them, but we will no doubt do so in the months and years ahead if supplementary business rates become a part of the horizon affecting both businesses and local authorities in the future.

Geoffrey Clifton-Brown: I am delighted to catch your eye in this debate, Madam Deputy Speaker. I had not intended to speak. I entered the Chamber this afternoon with a relatively open mind on this proposal, but the more that I listened to the debate, the more I realised that the Bill lacks adequate safeguards for businesses and the more I therefore realised that my Front-Bench colleagues are right to oppose it, for the reasons that I wish to outline.
	The people of London have already been, or are likely to be, caned through increased council tax to pay for the Olympics, and it now seems that the businesses of London are to be caned through this mechanism to fund Crossrail. Before the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) leaps up to intervene on me, I wish to say that I totally support Crossrail, but a fairer method of funding it—if the Government wish to do it that way—would be a supplemental increase in the uniform business rate so that all businesses throughout the country pay for it. As he and others have made perfectly clear, all businesses in London and businesses elsewhere in the country are likely to benefit from these measures, so why should they not all pay, rather than just a certain section of them?
	There are a number of reasons why I oppose the Bill, but my hon. Friend the Member for Northampton, South (Mr. Binley) made the very powerful case that now is not the right time to introduce such a measure. The country is enduring negative growth and huge increases in unemployment, the rate of business failures is increasing alarmingly, and the rate of business output is decreasing alarmingly. Perhaps the most important reason is that given by the hon. Member for North Cornwall (Dan Rogerson): we have to remain internationally competitive. If we keep increasing bureaucracy and taxation on businesses, they will simply relocate away from these shores.
	I have just come back from Hong Kong where there is a maximum corporation tax of 15 per cent., no capital gains tax, no inheritance tax and very low business rates. It is very easy to get money in and out of Hong Kong, and the tax returns are one page long. Let us compare that with the bureaucracy of this country and the huge increase in it that this proposal will engender. It is not just tax-raising problems that these proposals will engender; there is the whole bureaucracy connected with collection, which the local authorities will have to undertake. As my hon. Friend the Member for Cities of London and Westminster (Mr. Field) said in the closing moments of his speech, a whole new form of software will be required to collect these rates.
	The Bill does not contain adequate safeguards. We all know what happened when the Conservative Government introduced the lottery. We were clearly told that it would be additional to normal Government expenditure and that in no way would it be used to supplement their tax-raising powers, expenditure on health or other normal expenditure. But what happened? This Government came along and started raiding the lottery for all sorts of purposes—health, education—that the lottery was never designed to pay for in the first place.
	Clause 3 sets out clearly some purposes that the mechanism is not supposed to pay for: housing, social services, education services, services for children, health services and so on. The problem with the Bill is that it contains very wide order-making powers. My reading of it is that the Government would easily be able to alter those purposes by a simple statutory instrument discussed upstairs. Indeed, almost anything proposed in the Bill could be altered by a simple statutory instrument after an hour and a half's debate upstairs.
	There is a second thing that I dislike about the Bill. Clause 4, entitled "Conditions for imposing a BRS", indicates that there is to be consultation on these proposals. One of the conditions is that a levying authority
	"has consulted the relevant persons on the proposal".
	Who are the "relevant persons"? Are they strictly businesses? Are they other organisations? In any case, this Government have made a new art form of consultation. We all know what happens when they consult on anything: they may take people's views but then they completely ignore them.
	Let us take the example of the post offices in my constituency. Twelve post offices were proposed for closure. There was a huge number of demonstrations, public meetings and letters and much annoyance of every sort—and the Government took not one jot of notice. I warned when my ambulance trust was going to be merged that there would be problems. What did the Government do? They consulted—and proceeded with the proposal. There have been countless occasions when they have consulted on things and completely ignored that consultation, so the safeguard in the Bill is very scant.
	Thirdly, there are other safeguards in the Bill. As has been mentioned by other Members, there is a 2p in the pound rateable value safeguard. There is a £50,000 safeguard—we believe—to be implemented. There are safeguards whereby a local authority can introduce transitional measures. Again, however, those can all be altered on a whim by a statutory instrument discussed upstairs. The Government must give an undertaking that those things will be constantly reviewed, because we all know what happens if monetary safeguards in a taxation regime are not upgraded from time to time—through fiscal drag the Government end up raising more money. For example, personal allowances, which were not increased for years under this Government, were, in effect, just an extra income tax that the Government were raising.
	The most important aspect of this Bill is the lack of a mandatory ballot of all the affected businesses. That is what I object to most, because if the Government had confidence in their proposals—and they clearly do not—they would be perfectly happy to allow businesses to have a ballot. As I said in an intervention on my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), the Government might be scared that businesses will block a proposal, but businesses will do so only when they consider it not to be in their interests. If they consider that improved infrastructure will improve their profits, they will want things to go ahead. The argument being made is incredibly weak, and I hope that my hon. Friends will address it in Committee—indeed, I have a forlorn hope that the Government may yet recant on this provision.
	We can all remember the days when businesses without representation went bust under the old local business rates system. In Sheffield, business owners had to take the roofs off their factories so that they were not liable for the excessive local business rates that the Sheffield borough council wanted to raise. If we are not careful, we will go back to that system and we will simply put businesses out of business. I was not elected to this place to put businesses out of business; I was elected to help my constituents form businesses for this country, so that we can create the wealth to pay the tax to have the Government expenditure on the projects that we want.
	I am extremely concerned about the lack of a ballot. The right hon. Member for Greenwich and Woolwich and I spent a great deal of time discussing business improvement districts in Committee when that system was introduced by the Local Government Act 2003. We discussed not only the fact that there needed to be a ballot, but the form of the ballot. I do not think it beyond the wit of man to see that we should do the same this time.
	My fifth objection to the Bill is that although businesses will be sheltered—they may only have to pay up to a third before there is a ballot—they may well have to pay more than a third. That is a real worry, and it is only a third in the initial prospectus that would trigger the ballot. We all know what local authorities, and, indeed the Government, are like at managing large-scale infrastructure projects. They have a habit of spending far more than the initial budget, and in such circumstances the whole project could cost much more. I have no doubt that Crossrail will come in greatly over budget, because a host of problems will be encountered in its construction. For example, we know that burying just one 7 km bit of cable under the ground for the Olympics will cost a staggering £160 million. Huge costs and huge difficulties are involved, and even with the best will in the world and the best surveyors in the world those cannot be fully foreseen until the machines start to dig the necessary tunnels for Crossrail.
	I have a great concern about how expenditure will be controlled. Much more than that, I am concerned about the Government's motive in all this. Once they have introduced this mechanism, I think they will start to say to every local authority in the land, "We're not paying for this large-scale infrastructure project. You pay for it, using the local rates supplementary mechanism." We might almost see an end to central Government funding of large-scale infrastructure projects, and that is what really worries me. We could find that such a situation became the norm, and that every authority that wanted a new road, railway, port or airport would be told that it must get its businesses to pay, because they were the ones going to benefit. We will simply find that, as happened under the old local business rates system, businesses will move away from those areas to where they know local authorities are cheaper—they are likely to be the Conservative-controlled ones.
	I am greatly concerned about the Bill, because it is a Trojan horse being introduced not, as my hon. Friend the Member for Northampton, South said, by a new Labour Government but by an old Labour socialist Government who do not understand the needs of businesses. This Bill is taxation through the back door, and it is dishonest taxation because it does not provide for a proper ballot. I hope that my hon. Friends will oppose the Bill for all they are worth. If the Government do not provide the proper safeguards, I hope that when we get into government after the next election we will provide them, because I was elected to this House to represent the interests of my constituents and of business, so that this country flourishes and gets a bigger and bigger share of world trade, not a smaller and smaller share, as is happening at the moment.

Mark Prisk: This has been an interesting, if somewhat short, debate, and it is a shame that only two Members from the Government party were able to join us this evening to contribute—I am sure that others might have been able to make a contribution. It is good to welcome the Ministers back to their places to be able to contribute at least to the end of the debate.
	The Minister for Local Government, who has just returned, set out the case in his characteristically cautious, but always reasonable manner. He and I had the fortunate—or otherwise, depending on how one describes this—opportunity to debate stamp duty land tax at some length; I am pleased to say that I get out more often now. He showed his ability to do an extraordinary turn at heel when displaying new Labour doublespeak. He started off with the old gag that a power to tax is not a tax—I particularly enjoyed that. When asked why the Government were cutting a particular initiative, he told us that it was not a cut—they were merely building it into the rates system. He then surpassed himself, because just for a moment, when using the deadpan manner that he uses when telling something that he knows is palpably incorrect—perhaps I should put it that way—a glimmer appeared at the edge of his lips as he told us that this Prime Minister and this Government have at their heart the belief in decentralising power. We all know that the reality is somewhat different; I could use many words to describe the Prime Minister, but "decentralising" would not be one of them.
	Business will be concerned that, when questioned, the Minister for Local Government refused to agree to ballots for all supplementary business rates. That is on the record, and businesses will note it. He also admitted when questioned that empty properties face an additional levy under this Bill, despite the impact that that could have at this time. Only Labour could charge 102 per cent. on empty business properties in a recession.
	We subsequently heard an excellent contribution from my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), who set out how the original principles have been lost in the Bill, how flexibility has been replaced with a rigid tax-raising scheme and how simplicity has been replaced with complexity. He also rightly spoke about the danger of removing ballots or not permitting ballots for all schemes. We want business and local authorities to work together, and the danger of this Bill is that it will merely divide those two camps. He also contrasted the words of the Prime Minister with the actions of his Government. This morning, the Prime Minister talked about jobs, yet this afternoon his Government are introducing a new tax on employers—we intend to highlight that contrast.
	We heard an excellent and knowledgeable contribution from the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), although it was somewhat short for him. At the beginning, he tried to pretend that the Conservatives are adamantly opposed to Crossrail, although he knows that to be untrue—I see him smiling on the Benches opposite. He was eloquent about the business improvement districts scheme—rightly so, for he introduced it. I differ with him in that I do not think that the scheme before us will engender that strengthened relationship between business and councils. I suspect that is where his argument falls down, but it was an excellent bid for a return to ministerial office, and we look forward to his coming to the Dispatch Box in due course.
	The hon. Member for North Cornwall (Dan Rogerson), who speaks for the Liberal Democrats, set out why his party will support the Bill. I was intrigued by the fact that the position may conflict with that of his colleague, Lord Cotter, who speaks for the Liberal Democrats in the Lords:
	"It does not seem to be a good time to introduce an additional cost for businesses that are struggling to survive in a time of economic crisis."—[ Official Report, House of Lords, 8 December 2008; Vol. 706, c. 222.]
	I agree with the noble Lord, but I am disappointed that Liberal Democrat Members are confused.
	We then had a wide-ranging contribution from the hon. Member for Newcastle-under-Lyme (Paul Farrelly), which was mostly about business rates arrears and an interesting press release that attacked the local council. I have no doubt that Ministers look forward to his contribution in Committee.
	We then had four strong contributions from Conservative Members: my hon. Friends the Members for Northampton, South (Mr. Binley), for Ilford, North (Mr. Scott), for Cities of London and Westminster (Mr. Field) and for Cotswold (Mr. Clifton-Brown). My hon. Friend the Member for Northampton, South spoke with his characteristic passion. He gave us the full economic context—perhaps a little fuller than you liked, Madam Deputy Speaker. In the broad range of issues, he highlighted and rightly contrasted the way in which the Government say one thing and do another. I hope that he keeps banging that drum—I am sure that he will—in the weeks and months to come.
	My hon. Friend the Member for Ilford, North spoke strongly in favour of Crossrail, which will benefit Ilford and much of east London. He also made a powerful point: consultation and ballots are not the same. I see the Minister nodding in agreement, and I hope that he will say so on the record.
	My good and hon. Friend the Member for Cities of London and Westminster made, as expected, a knowledgeable contribution. He gave the history of how such infrastructure projects need to be funded, and the underlying dilemmas. He explained the difficulty of quantifying benefits for businesses and why the matter needs to be handled with such care. That is the line that we want to take.
	Last, but by no means least, my hon. Friend the Member for Cotswold made a powerful contribution. Like me, he is a chartered surveyor, and he brought his knowledge of surveying to the debate, as well as a powerful exposition of the weakness of the Government's arguments. He highlighted the fact that many of the key elements are not in the Bill, but will be revealed later, dripping through the legislative system when we can challenge them only more weakly.
	The core of this debate and the origin of the measure lie, as hon. Members have said, in the Lyons inquiry into local government finance. It highlighted the need for local authorities to have a more flexible way of raising supplemental revenue for local economic development. Several hon. Members pointed out that the inquiry emphasised that
	"local supplementary powers should be designed in a way which can gain credibility with business and the wider community."
	That is where the Bill's weakness lies. The Government's White Paper followed in October 2007 and set out the key features of a new business rate supplement. They were to include a limit on the rate in the pound, the need for businesses to be balloted, although only in limited cases, and the exemption of businesses whose rateable value falls below £50,000. Those elements remain in the Bill.
	Alongside that has been the need to progress the Crossrail scheme. Indeed, a business rate supplement in London will be used to part-finance the expected £16 billion cost of Crossrail. We welcome and support Crossrail, not least because it will enable us to link our capital's rail network and help to reduce the pressure on an already overcrowded tube network. However, it is not unreasonable for many London businesses to question the cost. After all, much of the revenue to be raised is likely to come from businesses in boroughs such as Westminster, the City and Hillingdon, where the specific benefit to each firm will be extremely difficult to show. There is evidence for direct and indirect benefits but hon. Members must understand that it is not wrong to raise those concerns, because those are the people who pay not just our salaries, but those of the public sector as a whole.
	That leads me to one of the key points in this debate. Business rates have long been resented by firms because they are taxation without representation. That charge is raised from entities that do not have a vote. The owner may vote and the staff may vote, but the firm—the payer of the tax—has no vote. If businesses receive nothing specific in return, they understandably question the fairness of the levy. That is why changes to business rates must be handled carefully. The Lyons inquiry said that the rules covering business improvement districts, for example, have been credible to the business community, because they specifically require that a majority of the affected tax-paying businesses must agree to the additional charge. Conservative Members support that approach.
	The Bill is fundamentally flawed because it seeks to permit a supplementary rate to be charged, but requires a ballot only in certain circumstances. Under clause 7, a ballot must be held only when the amount raised accounts for more than one third of the estimated costs. Councils may hold ballots in other circumstances, but they are not obliged to do so. That is the problem. There should be a vote on any proposed supplementary rate with no ifs or buts.
	Issues arise about costs, not least the fact that they could range from £319 million a year to £600 million a year. It would help if the Minister clarified the basis on which those estimates were made. After all, they come at a difficult economic time when output is falling, unemployment is rising and the economy in this country is contracting faster than in any of our G7 competitor nations. The result is a squeeze on small businesses, which is why so many business organisations are worried about the measure. Perhaps the Minister will tell us how many jobs could be lost as a result of introducing the measure now. What is the Government's estimate of the number of jobs that will be affected by the extra charge?
	The impact of the measure could be affected severely by the rates revaluation planned for next year. It will be based not on 2010 values, but on values at 1 April last year. Hon. Members will realise that that creates two serious problems. First, many firms will face big rises in rates bills, just when they can ill afford them. Secondly, the revaluation will push many firms that are below the £50,000 threshold into paying the new charge. Implementing the levy now will deliver a double whammy to many small and medium-sized firms. The question for us is, why is it right that in the next year those businesses must pay more on their main rates bills and more on their supplementary rates bill?
	In conclusion, there is a case for businesses to contribute to infrastructure projects from which they benefit. Clearly, businesses throughout London will benefit from Crossrail and a radically improved rail service. However, the Bill is fundamentally flawed. A measure that should be flexible and accountable has been turned into a rigid tax rise that is needlessly complex and highly undemocratic. At a time of recession, it threatens not to help economic development but to burden hard-pressed employers. At a time when firms need fewer regulations, it introduces more red tape. At a time when we should be encouraging councils and businesses to work together, the Bill threatens to divide them. For all those reasons, the Bill is a missed opportunity that businesses and their workers can ill afford.

Sadiq Khan: I wish you a happy new year, Madam Deputy Speaker. I thank right hon. and hon. Members who have taken part in this interesting and lively debate.
	I want to reiterate the purpose of the Bill, which seems to have been lost in hon. Members' rustiness in Second Reading debates. It is another tool for local authorities, and introduces a new power for county councils, unitary district councils and the Greater London Authority. It will provide them with a new way of investing in the economic development of local areas and of working closely with local businesses, and it will enable local authorities to invest in projects aimed at promoting economic development that they would otherwise not be able to invest in.
	Let me be clear that if the Opposition are successful in defeating the Bill on Second Reading and the Bill does not pass into legislation or it is delayed, the London Mayor will simply not be able to levy a business rate supplement by April 2010 as he desires. I listened with interest as the hon. Member for Cities of London and Westminster (Mr. Field) said that a delay in passing the business rate supplement would show a lack of confidence in the City. He cannot have his cake and eat it. When it comes to voting on Second Reading, he will have to decide whether he wants the Crossrail investment, with the additional jobs that that will create and the improvements to London that it will lead to, or whether he wants to play party politics.

Bob Neill: Will the Minister give way?

Sadiq Khan: The hon. Gentleman has had plenty of time to wind us all up; I would like to wind up the debate.
	As my right hon. Friend the Minister for Local Government explained in his introduction, we are committed to doing what we can to help people through these tough times. At the same time, we need to look to the future and to prepare for the upturn in the economy. The business rate supplement should not be stalled by short-term concerns. The Bill does not propose a new duty on local authorities to levy a supplement. Instead, it provides a new discretionary power for local authorities to raise revenue to invest in local projects aimed at promoting economic development when the time is right. As the Bill is drafted, a business rate supplement will apply equally across the entire area on the basis that projects should benefit whole areas.
	I shall now go on to address some of the points raised by hon. Members during the debate. The hon. Member for Bromley and Chislehurst (Robert Neill) moved the amendment and he had a lot of time over Christmas to think of it. It is a Christmas tree amendment. The only thing missing from it is the kitchen sink. He was his normal, amusing self and we hope that he keeps his job in the imminent reshuffle. I was not clear whether he was calling the Bill BRS or BS—I know that we think that it is an important Bill that will have many benefits.
	My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) did an excellent job of demolishing the points made by the hon. Member for Bromley and Chislehurst. My right hon. Friend also made a positive case for the BRS. Of course, he was the architect of business improvement districts. He explained why the BRS is an important complement to the BID scheme that he drafted, rather than an idea in conflict with that scheme. He showed the irrationality of the Conservative amendment and asked why Crossrail should get the BRS and not the rest of the country. That is the Mrs. Merton question. Why do the Conservatives support and want to help transport infrastructure in a city with a Tory Mayor and not in the rest of the country? The answer, of course, is obvious.
	I thought, in a non-patronising way, that the hon. Member for North Cornwall (Dan Rogerson), who speaks on behalf of the Liberal Democrats, made a grown-up and sensible speech. It was very good— [ Interruption. ] May I add that I am not being patronising? He articulated the folly of a Member voting against giving the Bill a Second Reading if they are in favour of Crossrail. He made the point that if the Conservatives were successful—God forbid—in the vote tonight, there would be no business rate supplement and no Crossrail. He made the point that grown-up politicians would make any objections clear in Committee and would come back to them on Report and on Third Reading.
	Let me answer the hon. Gentleman's specific point about having an element of the uniform business rate subject to local control. The Lyons inquiry, to which he alluded, considered the case for returning business rates to local control. Its analysis was that that would not be appropriate at this time. Instead, it recommended introducing a new local power to set a supplement on the current business structure, and that is what we are doing with the Bill.
	My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) made an interesting contribution to the debate. He talked about the benefits of a business rate supplement outside London and also articulated some of the problems with the current system. He is hoping that a business rate supplement will alleviate some of the problems that he articulated. He referred to the recent problems with Waterford Wedgwood, which I think happened in the constituency of my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher), and to how the BRS could be a tool for local government to help infrastructure in various parts of the country.
	I come now to the comments of the hon. Member for Northampton, South (Mr. Binley)—where do I begin? His speech was a 32-minute tour de force. It was a speech that was interesting. He referred to the fact that he had spent two and a half years considering a Bill on Crossrail. If he supports his party in voting against Second Reading tonight and succeeds, those two and a half years will have been wasted. Crossrail simply cannot happen within the necessary time scales unless we get the scheme on the road. He made the point that his local Indian restaurants would suffer if the Bill were passed—I am not sure why. He will be aware that 91 per cent. of businesses around the country will not be affected, but if he has any particular problems and if any local restaurants suffer, I would be happy to visit his constituency, to visit the restaurant, to have a meal and to deal with the points that might be raised. I am not sure whether to say that I look forward to his being a member of the Public Bill Committee and to our having a ding-dong in Committee.
	The hon. Member for Ilford, North (Mr. Scott) made a good speech. He explained that he was in favour of Crossrail. Once again, he will need to decide whether he can have his cake and eat it. If he votes against Second Reading, he cannot be in favour of Crossrail. He spoke in favour of BIDs and he will be aware that, as we were reminded, his party opposed BIDs when they were first introduced. I look forward to his being a member of the Public Bill Committee.
	The hon. Member for Cities of London and Westminster, who should have declared an interest as a huge beneficiary of the Bill, has a problem. In one breath, he talked about this being a less opportune time for a business rate supplement, but he went on to say that, if there was a delay, that would send the wrong signal to businesses and show a lack of confidence in the City. He cannot have it both ways. If he wants Crossrail to happen and wants London to benefit from it, he needs to decide which way he is going to vote tonight.

Mark Field: It is only fair to point out that the business rate element for Crossrail plays only a very small part in the entire funding of the scheme. It would be wrong to suggest that having concerns about the legislation is somehow entirely at odds with supporting Crossrail— [ Interruption. ] It is pretty disingenuous of the Government to suggest that. A very small proportion of the overall funding for Crossrail as a whole will come from this legislation. Much of it will come from a number of other sources and not least from central Government.  [ Interruption. ]

Sadiq Khan: rose— [ Interruption. ]

Madam Deputy Speaker: Order. Will Members who have recently joined the debate please keep the level of conversation down?

Sadiq Khan: The hon. Member for Cities of London and Westminster speaks regularly to the Mayor of London. I cannot copy the Mayor's accent but he says that revenue helps to secure borrowing, and the hon. Gentleman should be aware of that important point as the MP representing an area that covers the City of London.
	The hon. Member for Cotswold (Mr. Clifton-Brown) made a suggestion that I really hope is taken up by his Front-Bench colleagues. He said that the whole country should pay the levy for Crossrail, and not just London businesses. Should that become Conservative policy, I look forward to visiting the constituencies of his hon. Friends to see whether they are in favour of it.
	The hon. Gentleman compared the UK to Hong Kong, which I found slightly surprising. He also put forward conspiracy theories about the Government's motives in making our proposals.

Geoffrey Clifton-Brown: Will the Minister give way?

Sadiq Khan: The hon. Gentleman has had plenty of time; in fact, he spoke for longer than I shall.
	Let us be clear. The choice is straightforward: you can vote against Second Reading, as Her Majesty's official Opposition want us to do, or you can support investment in businesses up and down the UK. You can support a Bill that will be part of a package of measures to help economic growth, or you can vote against it and propose unworkable amendments. You can be optimistic—

Madam Deputy Speaker: Order. I think the hon. Gentleman is referring to the fact that Members can vote. I am not in the position of being able to vote one way or the other.

Sadiq Khan: I am hoping that we will not need your vote tonight, Madam Deputy Speaker.
	Members have a choice: they can vote in favour of optimism and helping businesses and communities to prepare for an upturn or they can vote for fatalism. Accordingly, I ask the House to support the Second Reading of the Bill and oppose the Opposition amendment.
	 Question put, That the amendment be made.
	 The House proceeded to a Division.

Madam Deputy Speaker: I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

The House having divided: Ayes 159, Noes 327.

Question accordingly negatived.
	 Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.
	 Question agreed to.
	 Bill accordingly read a Second time.

business rate supplements bill (programme)

Motion made, and Question put forthwith (Standing Order No. 83A),
	That the following provisions shall apply to the Business Rate Supplements Bill:
	 Committal
	1. The Bill shall be committed to a Public Bill Committee.
	 Proceedings in Public Bill Committee 
	2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 3 February 2009.
	3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
	 Consideration and Third Reading 
	4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
	 Other proceedings 
	Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.— ( Hazel Blears .)
	 The House divided: Ayes 292, Noes 199.

Question accordingly agreed to.

business rate supplements bill (money)

Queen's recommendation signified.
	 Motion made, and Question put forthwith (Standing Order No. 52 (1)(a) ),
	That, for the purposes of any Act resulting from the Business Rate Supplements Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred by the Secretary of State by virtue of the Act.— ( Mr. Timms .)
	 Question agreed to.

Business without Debate

DELEGATED LEGISLATION

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Government Trading Funds

That the draft OGCbuying.solutions Trading Fund (Extension and Amendment) Order 2008, which was laid before this House on 5 November, in the previous Session of Parliament, be approved.— (Chris Mole.)
	 Question agreed to.

committees

Madam Deputy Speaker: With the leave of the House, we will take motions 5, 6 and 7 together.

Environmental Audit

Ordered,
	That Mr. Phil Woolas be discharged from the Environmental Audit Committee and Jane Kennedy be added.

Tax Rewrite Bills (Joint Committee)

That Mr. Quentin Davies and John Healey be discharged from the Joint Committee on Tax Law Rewrite Bills and Mr. George Mudie and Mr. Stephen Timms be added.

Treasury

That Mr. Siôn Simon be discharged from the Treasury Committee and John Mann be added.— ( Rosemary McKenna, o n behalf of the Committee of Selection. )

MENTAL HEALTH ADVOCACY

Motion made, and Question proposed, That this House do now adjourn. —(Chris Mole.)

Charles Walker: It is a great privilege and honour to move the first Adjournment debate after the Christmas recess. I welcome the Minister to his place. I had the great pleasure of working with him when I served on the Public Administration Committee and he was the Minister for the third sector. He took a great deal of interest in the work of our Committee and he always listened and was always helpful. I hope he will be equally helpful this evening.
	I had the great honour and privilege of serving on the Mental Health Bill in 2007. The Bill has now become an Act and its measures came into force on 3 November 2008. Many parts of the Act were welcomed in all parts of the House. However, some parts of the Act caused many Members on all sides of the House great concern. The Act contained significant powers to detain and treat people against their will. Many of us in this place were concerned about that. The Act also incorporated safeguards in the form of independent mental health advocacy that would ensure that people who were being detained against their will or faced being detained against their will for mental health problems could receive the support of an independent advocate. That is crucial.
	When someone has a mental illness and has an episode that requires or may require their detention, their liberty is removed and their freedom of movement is restricted. Some people are committed to secure hospitals. Others are subject to community treatment orders which restrict their liberties and freedom of movement in the community. The role of the advocate is to support those people in their dealings with health care professionals. Someone having a mental episode may be extremely bewildered, upset and frightened. They get a great deal of information, some of which they do not agree with and much of which they may be hostile towards. They can feel very alone and isolated.
	The role of advocates is to stand and sit by that person and to ensure that they understand as far as possible their rights under the Mental Health Act 2007—their right to say no and to question the treatments and recommendations proposed by health care professionals and clinicians. That is a hugely important part of the Act.
	Let us turn for a moment to our criminal justice system. When defendants before the courts face losing their liberty, we have a robust legal system which ensures that they get proper representation, that their interests and concerns are given a proper hearing, and that their side of the story is put. It is just as important that people who face being incarcerated and having their liberty removed as a result of a mental health episode have the same level of professional representation—people who go in to bat on their behalf.
	As I said, the Act came into force on 3 November 2008. However, the part of the Act dealing with mental health advocacy is not due to come into force until 1 April 2009. That creates problems, which I should like to explore with the Minister for a few moments. We are about 10 and a half weeks away from the go-live date, but the commissioning of these services by primary care trusts has only just got under way.
	On 16 December, just before the House rose for the Christmas recess, the Minister made a helpful statement about how the tendering process would commence. However, today is 12 January and we have just over 10 weeks to get the services in place. Tendering and commissioning is a complex process that requires thought and time. Organisations such as the NHS Confederation, Mind and Rethink are concerned that the tendering could be rushed and that solutions that do not best fit the needs of mental health patients will be put in place. We need to be alive to those concerns.
	One of the fears is that because of the short space of time for putting out a tender and commissioning the services, the process may favour large, national providers. As the Minister will know from his time as Minister with responsibility for the third sector, I had a concern about such providers squeezing out good, locally based advocacy providers. Large, national providers have large infrastructures and experts within their tendering teams who can quickly put together and present a complex tender. They may be good advocacy providers; I do not doubt for a minute their ability to deliver the service. However, we must ensure whenever possible that established local groups get the chance—or perhaps are prioritised—to deliver the services. Such organisations are rooted in communities and have a track record of success. I hope that the Minister will give PCTs further guidance on how to ensure the outcome within 10 and a half weeks from the go-live date.

Tim Loughton: I have listened carefully to my hon. Friend and I can endorse his knowledge of and input into this subject, as I was leading for the Conservatives on the Mental Health Bill.
	My hon. Friend is absolutely right. My concern is that the Mental Health Act 2007, which represents a reform of mental health legislation for the first time in about 25 years, contains a lot of innovative, controversial and technical legislation. To have advocates in place by April, late though that is, is demanding. To have well trained and well qualified advocates in place capable of offering the service to many vulnerable people in complicated conditions is a great challenge. My fear is that those people might not be available.

Charles Walker: My hon. Friend has pre-empted the next part of my speech; if he will bear with me for a few moments, I shall answer his intervention.
	I am very concerned that small local providers of advocacy services may be squeezed out as a result of the tendering process. The 2007 Act also set aside £8 million in the regulatory impact assessment to fund the provision of additional advocacy services for people suffering from mental illness who face having their liberty removed and restrictions being placed on their freedom of movement. I believe that the £8 million is still in place and will go to primary care trusts and it is very important that it should. That is additional expenditure.
	One of Mind's concerns is that the money may not materialise and that we will have to rob Peter to pay Paul—that the PCT funding for advocacy services working for other groups of patients will be reduced, so that PCTs meet their statutory obligation under the 2007 Act. I am sure that the Minister will answer those very real concerns as he winds up this evening. We do not want to see again the viability of small local groups being put into question because they have suddenly lost significant parts of their funding because PCTs are meeting their obligations by bringing in larger, national providers of advocacy services. I hope that the £8 million will come.
	I appreciate that we live in straitened financial times and that Members asking for money in the House tend to get pretty short shrift. However, the NHS Confederation is extremely concerned that, given the short time available to get the services in place, the £8 million will not be enough. In a sense, I am the mouthpiece of the NHS Confederation on that point; I am bringing its concerns to the Minister. I hope that he will be able to respond. Whatever he says, I am sure that it will go some way towards putting the minds of those at the NHS Confederation at rest.
	My hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) mentioned training and qualifications. As we debate independent mental health advocacy this evening, there is no recognised qualification in place for these advocates to take. There are plans afoot and wheels in motion to produce that qualification, but as of yet it has not materialised. I hope that in the next six months something will appear. As my hon. Friend said, the legislation is extremely technical, and we need people representing the mentally ill who have an implicit and intrinsic understanding of it and of their client's rights under it. In the criminal justice system, one would expect to be represented by a lawyer or, at the minimum, a paralegal of some training who understands what is going on. We should not in any way sell the mentally ill short on the quality of the representation that we give them.
	There is a delayed training requirement. By that, I mean that people providing advocacy from 1 April will not be required to demonstrate proficiency in the Act for a year after they have started providing that advocacy. I do not know—perhaps the Minister can tell me—whether that is only in the first year from 1 April 2009 to 31 March 2010, while the Act beds in. However, I hope that as soon as possible we can ensure that people providing this service in very stressed conditions where the stakes are very high—we are talking about removing people's liberty for six months or more—have the level of expertise to get it right and to ensure that the clients whom they represent are confident in their abilities. I know that it is dangerous territory to talk about measuring the effectiveness of representation, because we have too much measuring, but in the early stages we need to ensure that the advocacy being provided, even by people with training, is up to the mark. People with mental illness deserve the very best, and we as a society should give them the very best.
	I have received representations from organisations and clinicians who represent and deal with ethnic minority groups, and they are very concerned about the delay in the implementation of advocacy services. A black Afro-Caribbean male exhibiting the same symptoms as someone who is white is twice as likely as a white person to be detained under mental health legislation. That is fairly horrifying, and it needs to be addressed. We need to ensure that people providing advocacy services have cultural relevance. I have nothing against people in the home counties providing advocacy services to a broad range of clients, but in inner-city environments it is absolutely vital that people providing those services understand the cultural issues and pressures and the sense of anger and fear that resides in many ethnic minority communities about their chances of being penalised and discriminated against under the Act. We need to ensure, as a priority, that minority groups get representation that meets their needs and in which they have total confidence.

Tim Loughton: My hon. Friend continues to make a strong case. There are subsections within black and minority ethnic communities, particularly young Afro-Caribbean men, for whom the figures are far worse than just twice the likelihood of being picked up. Not only are there problems with encouraging members of BME communities experiencing mental health problems to access services—they are often less likely to come forward—but once they are in the care of those services it is vital that they have trust in somebody who is going to advocate for them. I have noticed that there is a campaign trying specifically to recruit advocates who reflect the people whom they are going to represent in court.

Charles Walker: The last thing we want is communities suffering in silence, or fearing an engagement with the health service that is there to serve them because they fear a result that affects their liberty or freedom of movement. My hon. Friend is absolutely right, and I know that the Government will be concerned about the issue. I know that they were concerned about it during the passage of the 2007 Act. All of us have a duty to get it right, for everyone, but we must not forget the difficult groups that feel excluded. We need to get it right for them as well if our mental health system is to carry the credibility it deserves.
	I have spoken for 15 minutes, which is the normal allotted time for such debates, but I understand that I have a little longer tonight. I will detain the House only for about another five minutes. Connected to the issue of mental health advocacy services is the idea of care in the community. While I have the Minister's attention, I would like to bring to his attention something exciting and innovative that I recently came across. We all accept that the idea behind care in the community was good, but that it lacked something in the execution. A lot of people felt very isolated when they were returned to the community because it remains fearful of people with mental illness—I shall return to that point at the end of my short speech.
	Something called adult fostering is being pioneered in America, which a few local authorities are now adopting. Adult fostering involves not taking people out of a mental health hospital and putting them straight into the community, but placing them with families who understand and have compassion for people with mental illness and who can meet their needs and support them back into the community. I think that idea is revolutionary. It is a truly exciting development, which really is care in the community, and reflects that aspiration. I know that the idea is slightly off the terms of tonight's debate, but I hope that the Minister will consider it. It works both ways: it helps people coming out of hospital back into the community, but it can prevent people from going into hospital by providing them with support to ensure that they can recover their equilibrium and do not need to spend time in hospital. I do not have the details of the scheme, but I would like to learn more about it. If successful, it might be implemented throughout this country, where we could be very proud of it.
	I conclude by noting that our tabloid press are having great sport with discriminatory remarks made by a member of the royal family. The reporting of the tabloid press on people with mental illness is atrocious and appalling, and it is discrimination of the worst kind. Many people are fearful of coming forward with mental health problems because they fear that they know how their community will react to them. There is still hostility in our communities to people with mental illness and I firmly believe that a lot of that hostility is whipped up by hysteria in the tabloid press. It is the worst kind of discrimination; it is vile discrimination. I hope that our tabloid press gets their house in order before we have to get it in order for them.
	Thank you for hearing me out, Mr. Deputy Speaker. I shall now allow others to take part.

David Drew: I am delighted to take part in this debate and I congratulate the hon. Member for Broxbourne (Mr. Walker) on securing it. I shall not detain the House long. I declare an interest in that my son works in the field of mental health, at Broadmoor hospital. He has some knowledge of aspects of mental health but in a slightly different context.
	I begin by congratulating the Government. I recently asked a parliamentary question about this issue, and the Minister's response was better than I expected—apart from the delay, we have done the right thing. We have realised the importance of advocacy, and I have long believed that we needed to do that. In a sense, the Government are going to get blamed whatever they do. If they had rushed ahead and implemented the advocacy strategy without sufficient numbers of people and without the strategy being grounded in real expertise, there would have been obvious problems. On the other hand, as the hon. Gentleman rightly said, it has been delayed beyond the implementation of the other aspects of the Act, which leaves some of us rather nervous.
	My concern throughout has been for the poor souls who are in the process of being sectioned. Those of us who know a little bit about it, perhaps not through direct experience but through talking to people who have been sectioned and those who undertake the sectioning, have found it somewhat bizarre that the advocate of the person being sectioned has, until the present change, been the very person undertaking the sectioning. That may be because those people are skilled experts who know how to cope with the various pressures that they will meet in the most difficult circumstances, but one has to be somewhat naive to believe that there will not be occasions when the person being sectioned genuinely feels that it is wrong, and that they cannot get the advice that they want, whether from a community psychiatric nurse whom they know or an approved social worker. The people giving them advice are essentially those who are taking their liberty away. Even if not immediately upon sectioning, we need to recognise that the independence of the advocate's role in giving advice to someone who has faced the most trying circumstances is right and proper.

Tim Loughton: I am grateful to the hon. Gentleman for giving way, because intervening saves me having to ask to make a speech. Is it not the case that a number of people who need to be sectioned for mental illness are sectioned at the instigation of family members who are acting in their interests but with whom they have fallen out? They do not feel that they can rely on family and friends to advocate for them informally, as they might in the case of other illnesses or in legal proceedings, because not trusting them is part of their illness. That is why the role of an independent advocate who can only have their interests at heart is essential, and why we really must get on with it.

David Drew: I agree entirely, but of course the corollary to that is that occasionally, someone who has been sectioned has every right to distrust their family. There might be a family dispute going on. Too often, people come to us to ask us to intervene, saying that someone is mentally unwell, when nothing of the sort is true. There might be a wider dispute, and the family has sadly taken the ultimate step of saying that the person in question is not of sound mind. They want to get the authorities to intervene so that a course of action takes place that will help them to argue their case.
	I have read the Mind briefing on the matter, which is very useful. It asks when the change will occur and whether it will genuinely happen this April. It asks how the change will be funded, who will be trained to do it and which organisations will have the means to undertake advocacy, which are all genuine questions. I support completely what the hon. Member for Broxbourne said, and I hope that as the Minister has a little longer than usual available to him, he can go into some depth in answering those questions.
	I wish to dwell on two matters that concern me. First, I would like to think that some of the advocacy could be undertaken by people who have themselves suffered from mental health problems. I never cease to be amazed by the way in which those who have recovered from such problems are the best at knowing about the service, its strengths and weaknesses and, if you like, where the bodies are buried. For all sorts of reasons, the matter has to be handled incredibly sensitively, but I hope that when we hand out the commission for the work that is to be undertaken, there is a genuine effort to use people who have had mental health problems and are prepared to use their expertise to advocate on behalf of those who are currently going through such problems. That can be incredibly powerful. It has to be done carefully, but I would like to think that it will be considered closely.
	Secondly, we have to be careful because we can get into something of a minefield. There are those who not only have mental health problems but are dependent on drugs and alcohol. We therefore need to recognise that the advocate's role involves a range of skills. We must take account, too, of those who also have learning disabilities. The role of the advocate may be not only to undertake advocacy in language that professionals understand, but to work backwards from the professionals to the person who has been taken under mental health supervision. Perhaps that person has no language capability and finds the process alien to their whole being. In my constituency, many caring people are trying to work with those who do not have language understanding but who may not have mental health problems.
	We know that there is an association between extreme learning difficulties and mental health problems, especially in later life. Those with severe learning difficulties can develop mental health problems, and it is vital to have advocates who can genuinely interpret and translate for and work with the sometimes difficult cases of people who do not understand what is happening to them, and why what is happening is anything other than cruel. I appreciate that it is difficult to talk about such matters and that I am considering an extreme, but unless we raise these issues and recognise the problem, there is a danger that advocates will not come forward. The job is skilled and will be difficult, and I hope that we find enough of the right people to do it. The last thing we want is for those people to be overused and drop out quickly because of the pressure. I hope that the Minister has some good things to say about that. I appreciate being able to make a short contribution.

Phil Hope: I congratulate the hon. Member for Broxbourne (Mr. Walker) on securing the debate and thank him for raising an important issue. I am delighted that my hon. Friend the Member for Stroud (Mr. Drew) and the hon. Member for East Worthing and Shoreham (Tim Loughton) took advantage of our slightly extended time as a result of the main business finishing early to share their commitment, concerns and passion about getting the matter right. Hon. Members clearly have knowledge and experience—they served on the Committee that considered the Mental Health Act 2007, and some can bring family experience to bring to bear, too.
	The remarks of the hon. Member for Broxbourne reflect a key concern, not only in mental health, on which I shall focus, but throughout the health service: how we ensure that everybody, regardless of background or circumstances, gets the best possible treatment and care. My hon. Friend the Member for Stroud mentioned diversity—I shall say more about the impact on black and minority ethnic groups shortly. It is important to convey a strong message, as we did with Lord Darzi's next stage review, that we put the patient and patients' needs at the heart of the health service. That is the key to improving the quality of care.
	The hon. Member for Broxbourne is right that, for the most vulnerable members of our community—patients suffering from mental health problems—advocacy is one way of helping to ensure that the patient and patients' needs are at the heart of the health service and to drive forward quality of care.
	Giving patients a voice through advocacy or in other ways is about more than simply improving services, although it will have that effect. As my hon. Friend the Member for Stroud hinted, advocacy is about helping preserve a person's dignity and self-respect, as well as protecting their legal and human rights, and that was considered when the Mental Health Bill was debated in Parliament.
	The debate is a great opportunity to spell out what the Government are doing about improving advocacy services. I hope that I will respond to all the concerns that have been raised. Before I go into detail, it might be useful to put the matter in context and describe how far mental health services have travelled in recent years. That shows why it is so crucial to get advocacy right.
	I hope that hon. Members of all parties recognise that mental health services have improved significantly in the past decade. The national service framework—supported, I am pleased to say, by some sustained increases in investment—has transformed the scale and scope of mental health services in this country. There are now 740 new mental health teams in the community, offering people reassurance and effective treatment at home. There are also some very good early intervention programmes for those experiencing a first episode of psychosis, ensuring that people receive the help that they need.
	I was intrigued to hear about the example from the United States that the hon. Member for Broxbourne mentioned. We should look not just to these shores for examples of good practice to spread, but throughout the world, where we see good practice, particularly in preventing people from entering forms of care that might be restrictive. The more that we can do that, the better.
	My hon. Friend the Member for Stroud mentioned people with drug or alcohol issues. There is a need not only for outreach services that reach out assertively to people in the community who have other problems, but to see how we can make that connection with mental health services as well.
	I am pleased to say that the work that we have done to date—clearly we want to do more—won international acknowledgement in the World Health Organisation's recent mental health report, which rated services in this country as among the best in Europe. That is quite a turnaround from where we were in the 1980s, with a patchy, Swiss cheese model of mental health services, if I can put it that way, with inadequate and underfunded provision hiding under the cloak of care in the community, which the hon. Member for Broxbourne mentioned earlier. Now, we see an increasingly confident, assertive and innovative sector.
	If the last decade has been about putting mental health on the road to recovery, by rebuilding capacity and encouraging diversity, we must respond in the next decade to new challenges. The biggest challenge of all is to ensure that some of the most vulnerable people in our community receive the care and dignity that they deserve. As I have already said, advocacy is key to that.
	The hon. Gentleman will know this, but I want to remind the House that mental health advocates have supported patients in many mental health services for a number of years, helping to involve them in decisions about their care and treatment. That may include explaining why people have been detained under the Mental Health Act 2007 and what that means, helping them to communicate their views to medical staff or giving them support as they prepare for tribunals, for example.
	Clearly, that is an important part of our duty of care and of upholding patient well-being. That is why we want to ensure that more mental health patients can benefit from mental health advocates. The Mental Health Act therefore seeks to improve and standardise existing arrangements, by introducing new independent mental health advocates, or IMHAs as they are known in the jargon. Such advocates must be available for all qualifying patients.
	Let me pick up the point that my hon. Friend the Member for Stroud made about the independence of advocates, which is a central part of the design of the service. Hon. Members who scrutinised the 2007 Act will know that that independence is an important part of the role of advocates. Advocates will help individuals to understand and exercise their legal rights and will represent their views and interests in decisions about their medical care and treatment.
	Independent advocates will be available to help most detained patients, as well as patients on supervised community treatment or in guardianship. Other patients whose treatment is subject to the special safeguards provided by the 2007 Act, which the hon. Member for East Worthing and Shoreham mentioned, will also be eligible. We estimate that just over 40,000 patients a year will be able to benefit from support from advocates.
	Hon. Members have expressed concern about the delay in implementing the measures. The statutory provision for independent advocates comes into force in England from 1 April, as the hon. Member for Broxbourne rightly said. He asked why it had taken so long. My hon. Friend the Member for Stroud summed up the dilemma quite nicely. We want to get on with it and make things happen, but also ensure that we get it right. They say, "Marry in haste, repent at leisure," and I am afraid the same is true of the more prosaic act of our implementing legislation.
	We wanted to ensure that the introduction of the new advocacy service went smoothly, which has meant developing appropriate local commissioning processes and putting training arrangements in place, about which I shall say a bit more in a moment. I want to assure hon. Members that I am as anxious as they are for the measures to be enacted, but we want to get them right, too.

Tim Loughton: I hope that the Minister will forgive me if I do not quite recognise the rosy picture that he paints of mental health services, not least because of the reduced funding, proportionately, that mental health services get as part of the NHS. I want to bring him to the subject of community treatment orders. He will know how contentious CTOs were during the passage of the Bill. From the initial draft Bill, through the further draft Bill and the pre-legislative scrutiny Committee, CTOs were always contentious. They have now come into force. One of the reasons that their opponents were prepared to accept the watered-down version of CTOs—objectionable though they were, in many respects—was the safeguard that would be provided by the advocacy service, for which many of us petitioned for many years. The CTOs and the advocacy service were supposed to start at the same time. Why has that not happened? Why have CTOs gone ahead without that safeguard? The Minister cannot say that he has not had any warning about this, because the Mental Health Bill was many years in the making, and advocacy was always something that many people wanted.

Phil Hope: I had better not get drawn into a debate about which party has given more funding to the NHS to support services of this kind. I think that the hon. Gentleman will probably find that he has voted against supporting more funding for the NHS. But let us not sour the debate by talking about which party has trebled the funding for the NHS from £30 billion to £100 billion a year over the past 10 years.
	I had reached the point about why we had delayed implementation. In fact, the Act says that advocacy will not be available in law until 1 April, so we are working within the time scale of that legislation. These matters were debated by the House. As I said earlier, we wanted to ensure that we got this right. We wanted to get the commissioning framework right, as well as the recruitment—about which I shall say a bit more in a moment—and the training. Making these decisions and getting these things right was central, and hon. Members who have contributed to the debate might, like me, not be happy with the delay, but they will none the less recognise that getting these things right is more important than implementing the measures in haste and getting them wrong.
	Getting the commissioning framework right was important. We wanted to develop a commissioning process that offered maximum flexibility so that local needs could be met. That maximum flexibility addresses some of the concerns that the hon. Member for Broxbourne raised about the ability of local and small organisations, as well as larger ones, to bid for contracts. In my former role as Minister with responsibility for the third sector, I ensured that the commissioning process across a whole range of aspects of Government policy provided such local organisations with a level playing field when bidding for contracts.
	A challenge for all organisations bidding to provide these services will be ensuring that they deliver a consistent, high-quality service, so that people can have confidence in the standard of advocacy wherever they live and whatever organisation is providing the service. During 2007, we consulted widely, including with third sector organisations, on the best commissioning arrangements for delivering the new duty. Last month, I reached the conclusion that primary care trusts were best placed to commission those independent advocacy services. That will have a number of advantages. PCTs can commission jointly with other PCTs, or they can delegate commissioning responsibilities to them. That will provide a powerful degree of flexibility, which will be particularly important when patients are moving between treatment providers in different areas.
	The system might also include advocacy services in partnership arrangements with local authorities, which would be useful, given local authorities' experience in commissioning other types of advocacy. PCTs already commission other specialist mental health services. Many have already commissioned non-statutory advocacy services for patients, for example. Given that the main users of independent advocates will be those receiving in-patient care, PCTs will be best placed to know what services are needed in their areas.
	I should like to draw attention to the guidance for commissioners that we published on independent mental health advocacy, as it addresses a number of the concerns that the hon. Member for Broxbourne raised. It also contains details on diversity, which I shall return to in a moment. First, however, I want to turn to funding—without getting into the territory that I mentioned earlier. We have taken into account the new statutory duty when setting PCT allocations for the next two years, so I can tell the hon. Gentleman that there is money in the system to support these measures, and we will expect PCTs to fulfil the duty effectively. Of course, different areas have different needs, and it will be for PCTs and their local partners to decide how best to use their resources to meet their statutory duty, but we want to give them plenty of support to help them exercise it.
	At the end of last year, the National Institute for Mental Health in England published comprehensive guidance for PCTs. It discusses good practice and sets out recommended processes for commissioning. I have also asked the institute to work with commissioners and with mental health services and advocacy providers to provide ad hoc support and information for those engaged in introducing the new service.
	What the hon. Member for Broxbourne said has given me a chance to make the point that independent mental health advocacy is not a replacement for anything, but a wholly new statutory service for a very specific purpose. It is there to provide extra assistance to people subject to compulsory measures under the Mental Health Act 2007. We have been very clear that independent advocates do not replace non-statutory mental health advocacy services. That is why we provided additional funding for PCTs. Advocacy provision is already available on a non-statutory basis, as we discussed earlier, from a number of agencies, and we expect those arrangements to continue.
	It is important to get the right people acting as independent advocates, as my hon. Friend the Member for Stroud argued. They must be well trained, genuinely independent and suitably vetted. I remind the House that we have published new standards in regulations that make it clear what qualities we expect of independent health advocates. Training and recruitment are crucial to the success of the programme, as I am sure the hon. Member for Broxbourne would agree. We laid regulations that set minimum appointment requirements and set out who would be responsible for checking that independent advocates met the requirements.
	Assuming that any individual—my hon. Friend the Member for Stroud made the particular suggestion that previous service users become advocates—meets the requirements, there should be no barrier to their appointment, but they really must meet the requirements set down in the legislation. Under the regulations, advocates must have appropriate experience or training for the role, and the Department website gives advice on what that involves. I hope that deals with the concern raised about a trainee carrying on when someone has been appointed; the people appointed must have appropriate experience or training for the role. We did not want to be too prescriptive, however; we wanted to be flexible about the experience and qualifications necessary, because we wanted to leave as much discretion as possible to those making the appointments.
	My Department is also working with City & Guilds to develop a national advocacy qualification, which will include a specialist module for independent mental health advocates. I anticipate that this qualification and its training materials will be available before independent advocates take up their positions on 1 April, and I expect all of them to complete their training within a year of starting practice. Alongside that, the National Institute for Mental Health in England is producing an effective practice guide, including issues such as patient engagement and working with other mental health professionals.
	In deciding whether a person has appropriate experience and training to overcome the concerns raised by the hon. Member for Broxbourne, the person or organisation appointing the advocate should particularly consider whether they have previous experience of working in advocacy, particularly mental health advocacy, or of working with people with mental health needs and whether they have successfully completed an advocacy qualification, such as the one I described a few moments ago.
	The hon. Member for Broxbourne and others raised concerns about the diversity of the groups that will need to use independent advocacy. I certainly recognise, and the guidance clearly spells it out, that the design of local mental health advocacy services can impact on access to the service by those qualified to receive it who have very different needs. Accordingly, regulations require commissioners in making arrangements for these services to have regard to the diverse circumstances and needs, including—and, I have to say, not limited to—the ethnic, cultural and demographic needs of qualifying patients.
	The commissioning guidance that I referred to earlier offers advice to PCTs on how their independent mental health advocacy services might best meet the diverse needs of patients. That specific question about diversity is also discussed in the training module. We will need to monitor the legislation carefully, and the hon. Gentleman is right to suggest that we need to monitor matters carefully. We know that in some circumstances, people from some black and minority ethnic groups have been more likely to be subject to compulsion in their care. The reasons for this are complex and, as he knows, not fully understood. That is why we have put in place and have been funding "Delivering Race Equality", which is a comprehensive action plan to help tackle the problems that BME communities can experience in mental health services. I am pleased to say that it is generating an unprecedented amount of work and research on how services can be improved, but there clearly is more that we need to be doing.
	To sum up—I have taken more time than I would normally take—mental health is at an important crossroads. As the national service framework draws to an end, we can look back on 10 years of rising investment, capacity and innovation, but we need to look forward to an even brighter future for mental health services. The "New Horizons" programme, led by my Department, will help us to chart a new way forward and a new vision for mental health, building on the old framework and incorporating good examples from other parts of the world. I am clear that that new way forward means putting patients first in everything that we do. Frankly, investment in mental health services will count for nothing unless it protects the patient and improves their experience of care.
	That has to be our singular purpose, and advocacy can really help us to deliver on that promise. We need to unlock the full benefits of the progress that we have made in the past decade for patients, which is why implementing this new duty is a huge priority for me and the Department. It is why we have taken such pains to prepare the ground thoroughly, and why I am confident that the new measures will, from April, make a real and lasting difference to people's lives—something that I know that I and other Members of the House desperately want to see.
	 Question put and agreed to.
	 House adjourned .